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January 11, 2013

The Nokia Q4 smartphone sales numbers released yesterday took me a bit by surprise, so we spent most of yesterday on the blog and on Twitter talking about the newest numbers. But now returning back to our series of One Nokia Problem Discussed In One Picture, today lets look at the transition from Symbian based Nokia smartphones to Windows Phone on Lumia.

A lot of people seem to be celebrating the 4.4 million Lumia smartphone sales number as if its 'good news'. They clearly don't know the industy or Nokia's past. Nokia did 4.4 million smartphones not per quarter, but per every two weeks back before the Elop Effect. The last time Nokia introduced a new Symbian version operating system - like the new Windows Phone 8 right now - was when Nokia introduced Symbian S^3 for Q4 in 2010. How did it do? In the first quarter, it sold 5 million units, led by its flagship, the N8 which sold 4 million units. Now, even as the smartphone market is more than twice as big, Elop's 'magnificent' Microsoft marvels on his Lumia series - after five months of trying, including not one but two new operating system versions and not one but three separate flagships - have yet to match that 5 million sales per quarter.

The 4.4 million seems like a big jump from the miserable Q3 when Nokia managed only 2.9 million Lumia, but bear in mind, that in Q2 of 2012, Nokia sold 4 million Lumia, so in the last 6 months of massive global Nokia/Microsoft Lumia/Windows Phone push, including new carriers announced and new operating systems released, Nokia grew Lumia by.. 10%. yes, a lousy 10% growth for Lumia in the past 6 months while the industry grew in the same period .. get this .. by 57%. You wanna call that a success? I don't, and I won't.

So lets go to the migration ie transition rate then from Symbian to Windows Phone. Elop promised when he released this risky Microsoft strategy in February 2011, that he will achieve 1-to-1 transition from Symbian to Windows Phone. Now we have seen Symbian at its last viable quarter, so its about time to count, did the migration succeed then. Here is the picture:

The above picture may be freely shared

Yeah. The promised transition from Symbian to Windows Phone has not succeeded anywhere near 1-to-1. Its not even doing 1 out of every 2, or even 1 out of every 4. If we measure by unit sales, and ignore the growth in the smartphone industry for the past 2 years, and try to paint this misery in the best possible light for Elop's misguided Microsoftian misadventure, then by unit sales, Nokia sold 28.8 million smarpthones per quarter as the strategy was announced, and today 2.2 million of those smartphones are still on Symbian. Out of the 26.6 million Symbian sales attempted to migrate to Lumia running Windows Phone, there are only 4.4 million that succeeded and 22.2 million loyal Nokia smartphone users on Symbian, that were scared away to buy a rival handset maker's smartphones, Samsungs and others on Android, Apple's iPhones, or Blackberries or whatever others. By unit sales, the failure rate of Elop's Microsoft strategy is 83% only 17% have succeeded. So only one in six existing Nokia customers were migrated successfully to Windows Phone. Thats one way to look at it, the 'rosy' view. How about the reality view? Brace yourself.

If we measure by market share, Nokia had 29% market share when the new strategy was announced. This measure accounts for market growth. So today, Symbian based smartphones only account for 1% of global sales, and Nokia therefore has attempted to transition the 28% of its smartphone customers it had using Symbian to Windows Phone. And now the successfull transition results in 2% market share for Lumia in Q4 and 26% of Nokia loyal smartphone user market share gifted to rivals, in scaring away loyal Nokia users to Android, iOS, Blackberry, bada and others. Now the failure rate of Elop's strategy is a mindboggling 93%. Yes, only 7% of Nokia's attempts to lure Symbian customers to Lumia has succeeded. Out of every 14 attempts to migrate a customer from Symbian to Windows Phone, 13 have run away. Only one in 14 attempts to transition to Lumia has succeeded. You call this strategy good, and worth pursuing?

The independent survey of Lumia owners in America by Yankee Group last year found that four out of ten Lumia owners hated the phones so much, they gave it a rating of 1 out of 5 where 5 is best, 1 is worst. And now we have the Bernstein study of smartphone users by platform, in USA and Europe, which found that only 37% of Windows Phone smartphone owners are willing to make their next smartphone purchase another Windows Phone (most of those are Nokia owners, Nokia has been selling about 75% of all Windows Phone smartphones, the other 'partners' are either completely abandoning the Windows ecosystem like Sony, LG and Dell, or severely cutting down their involvement like HTC or pursuing other platforms like Samsung, or simply no longer providing new handsets for Windows Phone 8 like Huawei and ZTE). Yes, 63% of current Windows Phone owners want desperately to get rid of their phone and replace it with anything else! Compare that to Android which has 75% loyalty or iPhone which has 95% loyalty according to the Bernstein survey. Even poor old beleagured Blackberry has 57% loyalty, far bigger than Windows Phone and look how badly RIM is doing with its current model line. (And yes, in 2010, prior to the Elop Effect, Nokia's Symbian based consumer satisfaction was second highest in the industry, behind only the iPhone. Nokia customers were very satisfied and loyally bought Nokia after Nokia after Nokia).

So lets take a new look at the same graph I prepared, and add the Bernstein finding. This is the best case of how Elop's Windows strategy has going forward, the green part is the only slice that Elop has been able to win over to remain with both Nokia and Windows Phone on his Lumia series.

The above picture may be freely shared

So yes, when we add the severe dissatisfaction with the Windows Phone operating system and Lumia by their first owners, almost two thirds want to get rid of their Lumia and take some other, any other operating system based smartphones instead of their Windows smartphones, on both sides of the Atlantic, then yes, this strategy is utterly doomed, not just failing now, but into the future. Because, look at the 'real picture' ie taking market growth into consideration, the right side graph - market share. Stephen Elop's mad Microsoftian misery has managed to migrate from totally satisfied Symbian Nokia users - Nokia grew smartphone sales 53% from 2009 to 2010 - to now, only one in 20 loyal Nokia Symbian users who were tricked into converting to Windows Phone, both arrived there and is intending to stay. 17 of those 20 have already been scared away and 2 of the remaining 3 are already decided, they will not remain with Lumia series longer. This is the very definition of textbook strategy failure.

The Windows Phone strategy has failed comprehensively. Nokia knew this strategy was extremely risky, they wrote a massive risks assessment, hundreds of itemized risks to the strategy, in their filing to the SEC and New York Stock Exchange two years ago. And Nokia listed various reasons why the transition might not result in a 1-to-1 migration from Symbian to Windows Phone. Those risks have come true, but the carnage to Nokia is worse than anyone could have anticipated. I had issued the most pessimistic forecasts for Nokia's preformance in 2011, and many derided me for those forecasts at the time. Now we can see that my forecasts turned out to be too rosy. The collapse of Nokia's smarpthone business has set a new world record for failure. Even we forecasters had no model to compare it to, nobody had ever failed this totally in any two year period, not in mobile phones, not in cars, not in soft drinks, not in airlines not in personal computers, never in any industry.

Now look at that graph. If this is the 'success level' for Lumia's transition - failing in real terms 93% of the time, or out of every 14 attempts, 13 fail - and of the remaining suckers who took the fool's gold peddled as Nokia Lumia smarpthones, two thirds hate it so much they will buy any other smartphone than Windows Phone next time, why would you think this 'strategy' can somehow turn into a success under Elop and running Windows Phone? No wonder Elop now is letting rumors spread that Nokia is considering Android instead of Windows Phone. No wonder Steve Ballmer at Microsoft has given up on Elop and Nokia, and is proceeding to build his own smartphones. And it is now no surprise that Elop desperately is peddling any story to trick journalists into believing Nokia is ok, such as reclassifying Nokia's S40 based featurephones on his Asha series as if they were smartphones. Sure, I can also call an Etch-a-Sketch a smartphone, it doesn't make it one. Luckily all major analyst houses are rejecting that silly claim.

The simple fact is, that looking at that picture, it is obvious that Elop has failed totally in his primary goal of his strategy. He did not fulfill on his promise. 19 out of 20 loyal Nokia Symbian smartphone customers have either already left, or have already decided not to continue with this unsatisfying smartphone experience. Its about time for the Nokia Board to wake up and fire this Microsoft Muppet.

That was the discussion of the risk that Nokia might not be able to convert its loyal Symbian user base 1 to 1 from Symbian to Windows Phone. Boy was Nokia correct in testifying to the SEC and NY Stock Exchange, that this Windows strategy was very risky. They were correct and yes, this risk has fully materialized. The strategy is simply doomed.

This was number 4 in my series of blogs about Nokia's strategy distaster, told in short snippets of one problem at a time, and illustrated with one picture. You may fully use any parts of this blog including the stats and the grraphics.

I will return soon with part 5, trust me, this is a disaster that keeps on giving and giving, but what do you expect, we have truly witnessed a World Record being made in management failure and incompetence. There is plenty of blame to lay on Mr 'Call Me The General' Stephen Elop, the Pretend-Patton Canadian, graduate of McMaster University, previously with Microsoft and now Nokia CEO.

January 10, 2013

So here we go.. Nokia surprised a lot of Nokia-watchers by releasing its official smartphone shipments numbers today, well before the final Q4 results are due. So we can do the Nokia part of Q4 Bloodbath analysis and also the full year for Nokia. As Nokia is the last vendor left providing Symbian, we can do Symbian for Q4 and full year, and as Nokia does the vast majority of Windows Phone, we can also do preliminary estimate for Q4 and Full Year 2012 results for Microsoft's Windows Phone ecosystem. Is it the promised 'third ecosystem'...

NOKIA Q4 SMARTPHONES

Nokia smartphones shipped 6.6 million units in Q4, up only 5% from Q3 when it sold 6.2 million smartphones. This is down from 19.6 million one year ago when Lumia first launched and 28.8 million when Nokia sold only Symbian based smartphones.

Nokia preliminary market share for Q4 is 2.8% (on my target market total unit sales number Q4 of 240 million smartphones). This is down from 3.6% in Q3 and 12.4% one year ago. More ironically, as Nokia's market share was 28.8% in Q4 the last quarter before the Elop Effect and Nokia's new strategy, Elop has managed to scare away literally 9 out of every 10 customers in just 24 months. This is a world record in market failure - not just in mobile phones, in any industry ever, by a global market leader of a Fortune 500 sized company. Literally a world record failure!

For the full year 2012 Nokia has shipped 35.0 million smartphones and end the year with 5% market share. That is a collapse from 2011 when it sold 77.3 million smartphones and held 16% market share, which itself was a collapse from 2010 when Nokia still saw massive growth in its smartphone unit and sold 103.6 million smartphones and had 35% market share.

So currently Nokia's smartphone unit holds 3% market share with essentially flat unit sales and declining market share. Its current ranking for Q4 in the Top 10 is definite to be worse than Samsung, Apple, Huawei, Sony, ZTE, LG, Lenovo, HTC and RIM. Yes. Nokia's best possible finish in the Top 10 is ranked 10th. Nokia was on top of the Top 10 when Elop took over two years ago. But Nokia may have tumbled out of the Top 10 smartphone makers altogether like Motorola did last Quarter. The company chasing Nokia into the Top 10 is Chinese Yulong who sell smartphones under the Coolpad brand and they are expected to sell between 6 and 7 million smartphones this quarter, so it will be very close whether Nokia falls out of the Top 10.

Meanwhile for the full year its not quite as bad for Nokia, as they had early 2012 quarters with healthier sales to help boost their rankings. Nokia's 35 million smartphones sold for the year 2012 puts them ahead of Lenovo, RIM, LG and HTC. Nokia cannot finish lower for the full year than 6th biggest smartphone maker, but also, we know it can't catch Samsung, Apple or Huawei, so Nokia cannot be better than 4th. The race is now between Sony and ZTE for whether Nokia finishes 4th, 5th or 6th. Nokia was twice as big as its nearest rivals when Elop took over.

LUMIA, WINDOWS PHONE, SYMBIAN

So Nokia also announced it had sold 4.4 million Lumia smartphones (they didn't give a split of how many of the new Lumia 920 running Windows Phone 8, and how many of the older obsolete Lumia series, hopefully we will have that split in the official Q4 results). But we can obviously calculate the Symbian/MeeGo split out of that, at 2.2 Million non Lumia Nokia smartphone sales.

So Symbian sales are down 37% from Q3, to 2.2 million. Lumia sales now with the new Windows Phone 8 finally launched, are up 52% from Q3 ie up from 2.9 million to 4.4 million. The 'boost' from Windows Phone 8 is a measerly 1.5 million Lumia units - a true catastrophic disaster when we compare for example to 2010 when Nokia launched a new version of Symbian, S^3 and a new flagship, the N8 (like the Lumia 920 now) and Nokia in the Q4 quarter sold 5 million new Symbian S^3 devices including 4 million N8 devices. And the smarphone market has more than doubled since then. If Elop knew what he was doing, he should have sold at least 8 million Lumia 920 units now - yeah, if the consumers were willing to buy Lumia and the carriers/operators and distribution were willing to sell it haha. The news we had earlier this week via Fortune was that a consumer survey of smartphone owners in the USA and Europe by Bernstein found that the Windows Phone customer loyalty is in the toilet, only 37% of Windows Phone owners are willing to buy another Windows Phone smartphone (compared to 95% for the iPhone or 75% for Android smartphones. No wonder Nokia is now suddenly willing to consider shifting to Android).

So for the first time in five quarters of sales side-by-side, Lumia series finally outsells the remaining Symbian smartphones. And now Symbian does tumble to 6th in the ranking of smartphone operating system sales in Q4 behind Android, iOS, Blackberry, bada and Windows Phone. The end is truly in sight now, Symbian Q4 market share is under 1%.

What of Windows Phone? Nokia has been shipping about 75% of all Windows Phone smartphones recently and there is no reason to think this would have changed for Q4. If we use the same ratio, the preliminary estimate for Q4 Windows Phone total shipments would be 5.9 million smartphones and a market share of 2.4% for the quarter. Yes, bigger than Symbian but nowhere near Blackberry, and very close to losing to bada as well. Windows Phone may be currently either 4th or 5th biggest smartphone OS in Q4. For the full year 2012 it isn't that pretty.

For the full year Symbian sold 18.5 million smartphones and Windows Phone will be somewhere between 15 million and 17 million. bada is going to be bigger than Windows Phone but will chase Symbian. Blackberry is nearly twice as big as Symbian at 33.5 million smartphones and Android obvously won the year and iOS is second. So the rankings of the full-year 2012 look like this: 1 Android, 2 iOS, 3 Blackberry. 4th is race between Symbian and bada. 6th is definitely Windows Phone at 2% market share. So much for your promised 'Third Ecosystem' that was supposed to have 20% market share or better by now haha by so many 'experts'.

MY FORECAST? HALF RIGHT, HALF WRONG

Some Tomi-haters are jeering me for that Kantar numbers analysis I gave. I gave the numbers as Kantar reported, and projected from those what it would mean for Nokia and Windows Phone and Symbian. I said the finding was surprising and I flipped my balance of Windows vs Symbian from what I said in November (two thirds Lumia, one third Symbian) to the other way around. Still, I predicted 6.8 million total smartphones for Nokia, it delivered 6.6 million. Thats almost spot on. I did originally have the mix almost perfectly for Lumia/Windows in November but now did alter it to the wrong mix. Yes. That was a bad call. Still, on the big picture I was very close.

As to Nokia actual performance we have the full story now: Nokia sold smartphones in the following pattern since Elop took over:

Still, from Spring 2011, I was by far the most pessimistic of any analysts making Nokia or Windows Phone forecasts at the time. Now look at the results? I was TOO OPTIMISTIC. Nokia did even worse than I was able to forecast and NOBODY had published a forecast worse than mine. Do I prove value on this blog?

Then when I had seen how much Elop had mismanaged the Nokia Lumia launch and first Lumia handsets, I did offer a revised forecast for year 2012 sales in June of 2012, where I downgraded my forecast to 5.3 million total smartphones (ok, that was too pessimistic, it was 6.6 million, but the average of these two forecasts was almost spot-on) and my forecast for Lumia sales in Q4 - with the stated clarification, that two Windows Phone 8 based Lumia phones would be launched by November 2012 - said Q4 Lumia sales would be 5.0 million units (was 4.4 million). For the full year 2012 I predicted 19.0 million Lumia shipments (the most pessimistic view in the industry) and Nokia only managed 13.9 million. Again, from June 2012, that was THE most pessimistic Lumia forecast by any forecaster or expert in the industry, and AGAIN I was too optimistic on Lumia.

No forecaster gets it 100% right, that is not possible. But the professional forecasters amongst us try to offer better insights and also - very importantly - to revise forecasts when facts change - AND to EXPLAIN WHY their forecasts have changed. I have done so diligently on this blog, and if you trusted what I said, you were closer to the truth than any other published expert at the time. During the summer of 2012, looking into Windows Phone 8, many of my peers were promising 8 million to 10 million Windows Phone Lumia sales levels. I said 5.0 million, was crucified here for being too pessimistic - and yet, I was the closest to the truth and even I was too optimistic on how incredibly poorly Nokia would perform in Q4.

With that, open for discussions and debates. But people commenting - if you come here to gloat that I was 'wrong' - I will delete your comment without a moment's thought unless you can provide any analyst whose forecast at the time - by May of 2011 or by June of 2012 - had a better number than mine. That Kantar projection was a warning on a usually-reliable early number, and I clearly state now, my revised mix, based on the Kantar numbers, was wrong; but my earlier mix of Lumia/Symbian was spot-on (I should have stayed with the November forecast haha).

PS what will Nokia and Windows Phone look like in smartphones for 2013? The market share will linger in the 2% to 3% range, it will not somehow magically now bounce up to 12% or 16% or 20%. That will not happen. I trust I have enough of a track history of being the most accurate Nokia smartphone sales forecaster that you can trust that prediction. If I'm off, I'm more likely to be too optimistic on Nokia than too pessimistic, but even if I'm off by 100% then Windows will be no bigger than 6% this year. And it won't be that big. And even 6% won't make Windows Phone anything like the, ahem, 'third ecosystem' haha.

Also don't forget my new series of blogs, telling each Nokia management mistake on this journey to the world record of management failure by Elop, in simple, one problem per blog postings (short ones, honestly) each illustrated with one picture

And to those who might suggest this disaster was not foreseeable, actually Nokia itself acknowledged all these problems we see now, in its SEC Form 20-F filing to the New York Stock Exchange in March of 2011. All the problems they said might happen - actually did come true. This is the worst disaster in any industry, ever. And if every risk that Nokia anticipated with its high-risk Windows strategy DID come true already, then don't expect any kind of speedy - or even slow - recovery. Nokia is doomed. Or at least, is doomed if Nokia's own risk assessment was this accurate. You judge for yourself, read the updated analysis of Nokia Form 20-F and the truth (with statistics).

January 03, 2013

So yes. Yesterday I wrote the long blog where I only focused on Nokia's own risk assessment, in the SEC filing Form 20-F for the NY Stock Exchange from March 2011. And I found 20 major risks that had come true, and why Nokia's Windows Strategy is utterly failed and doomed. But its a very long tedious blog. Now I will embark on a series of single-topic blogs about the Nokia strategy failure, illustrating each failure by one graph and related stats and/or analysis.

Lets start with the obvious. How did Nokia's strong smartphone unit sales growth turn suddenly, instantly, into a suicidal collapse? This is how it happened:

This graph may be freely shared

Note how Nokia had steady growth from each year-half to year-half. Here is the data by year:

Nokia smartphone sales grew 53% from 2009 to 2010, until they turned instantly into catastrophic decline. From its peak sales in Q4 of 2010 when Nokia sold 29 million smartphones, exactly 12 months later that was down to 14 million per quarter - a fall of half, and now for Q4 of 2012 we expect sales at the level of about 7 million (my forecast is 6.8 million) which is again a collapse of half in just 12 months. Never in the history of mobile phone handsets, has any leading brand fallen this fast, not Siemens, not Palm, not Motorola. This is a world record collapse of a market leader. Bear in mind, while this happened, the global smarpthone market grew by 50% in 2011 and 40% in 2012. Nokia was the only major smartphone maker to actually see decline in unit sales while the industry grew so strongly over the past two years.

The Nokia strategy in 2010 had the industry-leading growth in absolute numbers, Nokia smartphones grew in unit sales more than Apple's iPhone or Samsung's smartphones or RIM's Blackberry. Nokia was also profitable doing this, and Nokia profits were increasing.

Every published mobile industry expert organization who made a Nokia-related forecast during 2010 was convinced that Nokia would continue as the world's largest smartphone maker into year 2011 and 2012 - that ws the consensus view, not one dissent! And every one of those industry experts, when considering Nokia using Symbian and MeeGo based smartphones, projected strong GROWTH in Nokia smartphones through 2011 and 2012. Every one of those experts was convinced that still today at the end of 2012/start of 2013, Nokia would be safely the world's largest smartphone maker. (that is the blue dotted line in the diagram)

That was before the Elop Effect happened in February 2011, and CEO Stephen Elop's ill-advised Microsoft strategy that caused instant Ratner Effect and instant Osborne Effect, which collapsed Nokia smartphone sales and plunged Nokia's smarpthone unit into ever bigger loss-making from which Nokia has not recovered. In fact, by Q3 of 2012, Nokia was reporting a massive 48% loss per smartphone sold, while the smartphone sales were vanishing.

When Elop announced his new strategy, he did not promise the previous growth rate of Symbian/MeeGo. But Elop did promise his new Windows strategy would achieve a 1-to-1 transition from Symbian to Windows Phone (that is the horizontal orange line in the diagram). His strategy had a two-year time span. That is now coming to a close on 11 February, 2013. So for Elop to 'achieve' his stated strategy, he should be able to deliver about 103 million smarpthone sales per year, now in 2013, all those migrated from Symbian to Windows Phone. In 2012, Nokia only managed to sell 35 million smartphones. That is likely to still fall further in 2013, to about 25 million for the full year, and about 2.5% market share. Nokia held 29% market share when this mad Microsoftian Misadventure was announced two years ago. This is comprehensive strategy failure.

Obviously, if you as CEO introduce a strategy that results in a world-record collapse in your market, then your strategy has failed and you have presided over a world-record in management failure. That means, obviously, that you as CEO are a total failure. Arguably, a world-record fool as CEO (but we'll get to that, one picture cannot yet prove Elop is the worst CEO of all time, although this first picture gives him a strong start in that race). And yes, Nokia's Board is complicit in this too - for them to tolerate the Microsoft Muppet and the Mad Microsoft Misadventure, the Board is also incompetent (or worse, in collusion with the delusional CEO) and must be fired.

I will return with more pictures and analysis of Nokia's smarpthone strategy fiasco in the coming days and weeks.

January 02, 2013

If you really want to cry about how badly Nokia has been
mismanaged, go and re-read the Form 20-F that Nokia filed shortly after Nokia's
new CEO Stephen Elop announced his surprise strategy and turned the strongly
growing, profitable, market-dominating handset maker into the diminishing,
loss-making, loser it is now. Oh? You didn't read the Form 20-F which Nokia
Corporation filed with the USA Securities and Exchanges Commission on 11 March,
2011? I did. At the time I remarked how many of the possible problems that
Nokia warned might come true, I was in fact already convinced would also come true, and now we see from the evidence, that they also have indeed come true.

So? If we want the truly honest measure of Stephen Elop's CEO tenure, his
radical strategy, and measure is it working or not - this is Nokia
Corporation's own statement to the USA Securities Exchange Commission and the
New York Stock Exchange, about its radical new strategy, and what all might go
wrong. This is not my suggestions of why or how we should measure Nokia's
success or failure, this is Nokia's own statement, issued during Q1 of 2011,
after the new strategy was unveiled on 11 February 2011. Please also note, this
is a very long article, that is not my fault, I only selected a FEW of the main
risks as identified by Nokia in the Form 20-F. If Nokia had decided not to
pursue such a risky strategy two years ago, I wouldn't need to write such a
long article. This whole article is only around Form 20-F and the risks that
Nokia itself identified as threatening the Windows strategy. Yes, there are plenty of OTHER mistakes that Elop has also done since then, but we will limit this blog only to Form 20-F. These are the problems that Nokia itself identified. So get yourself a
cup of coffee before you embark on this long blog but if you are interested in
can Nokia (or Elop) survive, read this blog and how Nokia itself identified its
risks with Microsoft.

FORM 20-F STATES CLEARLY WINDOWS
STRATEGY IS FULL OF RISKS

In the filing, Nokia Corporation told us how long the transition to the new
strategy would take "We expect the transition to Windows Phone as our
primary smartphone platform to take about two years." The exact
two-year milestone will be on 11 February, 2013, in about 40 days from today. I
expect many business, telecoms and strategy writers to re-examine the Nokia
failure in its Microsoft strategy at that point. Lets now use Nokia's own
standard for how to measure success or failure of its strategy, as Nokia told
us in the Form 20-F.

Nokia warned that if the Nokia strategy with Microsoft were to fail, most
likely Nokia would then become a low-margin box-mover basic handset maker (hey,
thats what I said on Twitter within minutes of this strategy first revealed).
This is what Nokia wrote:

Our proposed partnership with Microsoft and change in our smartphone
platform strategy are subject to certain risks and uncertainties, which could,
either individually or together, significantly impair our ability to compete
effectively in the smartphone market. If that were to occur, our business would
become more dependent on sales in the mobile phones market, which is an
increasingly commoditized and intensely competitive market, with substantially
lower growth potential, prices and profitability compared to the smartphone
market.

So please understand - Nokia explicitly said if this Microsoft strategy were to fail in the two years period, that would leave Nokia as only a dumbphones-maker of very low-margin business. That this strategy in effect threatened Nokia's future as a smartphone maker. If the Microsoft strategy were to fail, Nokia would become a 'box mover' like Dell is in the PC market. Very low-margin, cheap dumbphone maker.

Lets get back to Form 20-F. After that, Nokia listed its perceived risks. And there were
many. Just general risks related to the Microsoft strategy produced 21 itemized
risks, before Nokia went onto specify hundreds more risks as they related to
the Symbian platform, the competitive 'ecosystem', differentiation, speed of
innovation, employee morale, etc etc etc. I am not going to take every single
item from the risks assessment, it would else produce the longest blog I've
ever written, and even on the holiday break, I am not about to do that amount
of writing. I will take some of the most obvious risks, as specified by Nokia,
and see how they panned out. Remember readers, this is not somehow 'Tomi
Ahonen's petty list of complaints'.. this is Nokia's official testimony, in its official filing to the SEC
and NYSE about what may cause the Nokia Windows strategy to fail. This is
Nokia's own published set of 'failure standards'. Nokia told us how to measure
failure (or success) with its strategy. This is directly from the Form 20-F in
the explicit section 3D Risk Factors, where Nokia wrote in bold:

Our proposed partnership with Microsoft may not succeed in creating a
competitive smartphone platform for high quality differentiated
winning smartphones or in creating new sources of revenue for us. (bold in original)

WINDOWS WAS RISKY PLATFORM OF TINY SCALE

Nokia then gave a lot of text and explanation about the
changes in the smartphone market, and then listed explicit problems with this
lead in: "Our proposed partnership with Microsoft and change in our
smartphone platform strategy are subject to certain risks and uncertainties ..
those risks and uncertainties include the following:

• The Windows Phone platform is a very recent, largely unproven addition to
the market focused solely on high end smartphones with currently very low
adoption and consumer awareness relative to the Android and Apple platforms,
and the proposed Microsoft partnership may not succeed in developing it into a
sufficiently broad competitive smartphone platform.

So now we know. When this strategy was announced, the
Windows Phone platform had a 2% market share and as of the latest quarterly
data reported, all Microsoft based smartphones, running both Windows Phone and
its older Windows Mobile version, had a combined market share of 4%. Today,
latest data from Q3 reveal that Windows on all platforms combined had a market
share of under 2%. Latest market data from selected major markets suggests
Windows Phone sales have suffered even more, and total Windows Phone market
share for Q4 may be rounded off to 1%. The Windows Phone operating system was
already sold and in production when Nokia selected this platform. Since then it
has shrunk in size. Nokia started selling Lumia based smartphones running
Windows Phone more than a year ago, so Nokia has now had more than a year of
contributing to the Windows Phone success. When this strategy was announced,
Nokia had 29% market share on its own operating systems. They are now down to
2%. So Nokia has sacrificed 27 points of market share of its own smartphone customers and that has
not moved the Windows Phone share up even one point of market share. This after more than a
year of Lumia sales. Absolutely, concretely, beyond a shadow of a doubt, the Windows Phone startegy for
Nokia has failed.

Then on the price. Windows Phone was and still is focused
only on the 'high end' of smartphones. When this strategy was announced, Nokia
average sales prices of its smartphones was 152 Euros (190 US dollars). Informa
has just reported that for year 2011, the average price of smartphones globally
was 188 US dollars. Earlier, Deloitte had calculated that 300 million ie 41% of
all smartphones sold in 2012 will cost under 100 US dollars. Nokia's Symbian
was well suited to provide smartphones into the low-cost segment. But Nokia's
Lumia series, the Windows Phone based smartphones had an average sales price of
160 Euros (200 US dollars) and the first set of the newest 'second generation'
Lumia smartphones that run Windows Phone 8 have an average price of 570 Euros
(717 US dollars). Nokia knew when announcing this strategy that the prices of
Microsoft based smartphones would be a risk. We have now seen, that as the
market has moved down in price, Elop's strategy has pushed Nokia into the
implausible business case level. The Windows Phone Lumia series is priced far
too high to sell in the volumes Nokia needs. Which is why for each release, almost instantly, within weeks of launch, the Nokia prices for Lumia handsets have collapsed. So happened a year ago now, with Lumia 800. So happened with the Lumia 900 last spring. So happened already now for the brand new Lumia 920!! The prices have been slashed because nobody wants these Lumia phones and Nokia has to move undesirable phones so they slash prices.

WINDOWS LIMITED NOKIA ABILITY TO DIFFERENTIATE

• Our ability to innovate and customize on the Windows Phone platform may
not materialize as expected to enable us to produce smartphones that are
differentiated from those of our competitors.

Yes. So far we've seen 9 Lumia models, which are all near
clones of each other, and arguably, all are clones of the original iPhone, via
the iconic design of the Nokia N9 that runs on MeeGo. There are no premium
camera models like has been famous for ever sinc the award-winning N93 with
real optical zoom, or the award-winning N8 that had a 12 megapixel camera, real
Xenon flash, etc, that ran on Symbian; or now, the award-winning 808 Pureview,
which has the monster 41 megapixel camera, real Xenon flash etc, that also runs
on Symbian. Even the top Lumia 920 does not even match the N8 for camera sensor
size, with Nokia's top flagship severely regressing to 8 megapixels, the level
where most rivals are, and leading rivals have long since moved to bigger
camera sensors. Nokia has a strategic partner in Carl Zeiss and yet under
Elop's Microsoft strategy, Nokia's Lumia series has been unable to capitalize
on Nokia traditional strengths, and abilities that Nokia customers expect. A
2012 survey of Nokia smartphone buyers by Nokia, published at Nokia's website,
revealed that when coming to replace their phones in 2012, the number 1 request
Nokia loyal existing customers had was the camera. And what do we now see? Samsung has taken the top cameraphone specs crown with the brand new Galaxy Camera. Why, if Nokia knows this from internal consumer surveys, would Nokia voluntarily abandon this competitive advantage - to Samsung no less?

Similarly QWERTY inputs. Nokia invented the full QWERTY input method for
smartphones long before there was a Blackberry. The last data Nokia revealed
before Elop came to run the company, was that for the year 2009, 27% of Nokia
smartphone buyers selected the E-Series which was essentially all QWERTY
handsets (there also were other Nokia smartphones with QWERTY keyboards). So
Nokia has millions upon millions of satisfied loyal customers who want a
smartphone that is differentiated from the iPhone and some of those love the
real physical QWERTY keyboard. Nokia even sold a separate Bluetooth-based foldable
QWERTY keyboard for those who wanted to have a larger keyboard for their
smartphones. Bizarrely, the Lumia series does not even support the foldable
Bluetooth keyboard and not one of the nine Lumia models released so far has a
QWERTY variant. Elop has admitted that there have been 'debates' inside Nokia whether to release QWERTY variants. As we know every major Nokia flagship recently on Symbian and MeeGo have had QWERTY variants like the E7 to the N8 and the N950 to the N9, but there is none for Lumia, we can see which side of the 'debate' Elop has been on. He is a moron. Nokia's own customers beg for QWERTY variants, yet the Microsoft Muppet won't give us any on Windows Phone. And worse - if he won't do one on the Lumia series, then what moment of madness was that 'decision' not to sell the N950 with MeeGo, after the N9 was winning all the awards and had massive sales success a year ago? Why not then release at least the N950 on MeeGo if Elop didn't want to do a Windows based QWERTY Nokia superphone? Idiot!

Nokia was able to differentiate very broadly with its Symbian
OS, and the Maemo and MeeGo advanced smartphone operating systems. But with
Windows, Nokia has not been able to differentiate. Not against other platforms,
not even against other smartphone makers on Windows Phone platform. Nokia's
Microsoft strategy has comprehensively failed in a critical ability for Nokia
to build scale and volume and win market share, because the Lumia series and
Windows Phone do not allow Nokia to differentiate. Nokia's ability to differentiate
was promised to increase with Windows. It has been severely curtailed instead.
Early Windows Phone models did not even support NFC, a feature Nokia had
started to roll out on its top end Symbian and MeeGo devices. Who only increases their differentiation, across Android, bada and Windows platforms? Samsung thats who? Differentiation and a broad product portfolio gives you reach and scale. Nokia knew that before Elop came to town. But Elop has refused to allow that now. Elop only wants to make i-Phon-a-Clones. Before Elop, Nokia never had Apple iPhone-envy. Elop contaminated Nokia and now it seems the Lumia series is all but cheaper-looking plasticky iPhones.

WINDOWS IS SIMPLY NOT COMPETITIVE IN GLOBAL MARKET

• The Microsoft partnership may not achieve in a timely
manner the necessary scale, product breadth, geographical reach and
localization to be sufficiently competitive in the smartphone market.

Scale? Nokia sold 103 million smartphones in 2010. That
refleced a growth level of 53% from 2009.Every single analyst who during 2010
published a forecast for Nokia performance into 2011 and/or 2012, said with
total confidence that Nokia's then-current Symbian (and MeeGo) based strategy
would yield solid growth into 2011 and 2012, and every single published handset
industry analyst was convinced Nokia would remain the world's largest
smartphone manufacturer in 2011 and 2012. Every single analyst was convinced.
The scale Nokia was expected to hit would be about 130 to 140 million
smartphones for 2011 and 170 to 200 million for 2012. That is the scale that we
are looking at, that Nokia was prepared to support, with the world's largest
factory capacity to produce smartphones, spread across 7 factories around the
world, including the world's largest handset factory facility, in China. Nokia
had the massive sourcing ability to buy components at bulk discounts. Those all
depended on Nokia's ability to continue to grow.

Instead of Nokia growing from 103 million in 2010 to about 135 million in 2011
and about 185 million now in 2012, what
happened, right after Elop announced his Microsoft strategy, Nokia smartphone
sales collapsed to 77 million in 2011 and 35 million in 2012 and something like 20-25 million in 2013. Nokia has
absolutely failed to "achieve in a timely manner the necessary scale to be
sufficiently competitive in the smartphone market.:." In the latest Q3 results,
Nokia's smartphone unit generated a 48% loss per every smartphone it managed to
sell! 48% loss per handset. When Elop announced this strategy, Nokia's
smartphone unit was healthy and reported growing profits from 9.3%
profitability before he took over, to 12.5% in the first full quarter he was in
charge. Elop's strategy has exchanged 12.5% profit for 48% loss. This is total
comprehensive failure, and it stems from the fact that his mad strategy cannot
sustain the level of volume that Nokia needs just to remain viable.

USA FAIL AT EXPENSE OF CHINA SUCCESS

• The Microsoft partnership may erode our brand identity
in markets where we are strong and may not enhance our brand identity in
markets where we are weak. For example, our association with the Microsoft
brand may impair our current strong market position in China and may not
accelerate our access to a broader market in the United States.

Duh! China is the world's largest smartphone market,
accounting today for almost a third of all smartphone sold. Nokia had over 70%
market share in 2010 in China's smartphone market according to Canalys and 6.8%
market share in the USA smartphone market in 2010 according to Kantar. After
the Microsoft strategy was announced in 2011, Nokia's China market share has
fallen to 6% according to Canalys Q2 data for China, and was that achieved with
any corresponding growth in the US smartphone market? Kantar reports that
Nokia's Symbian and all Windows Phone (which includes HTC, Samsung and other WP
manufacturers) total market share in the US market is now 2.9%. The Chinese
market was sacrificed achieving a LOSS to the USA market in return! Yes, the numbers do not lie. Before Elop's Mad Microsoftian Misadventure, yes using 'obsolete' Symbian, Nokia had nearly 7% of the USA smartphone market and over 70% of the far bigger Chinese smartphone market. Since then the US market has grown a little but the Chinese market has grown massively. And in both markets Nokia has collapsed. This is a totally,
comprehensively failed strategy. A December survey of Chinese online sales
found that Nokia's Symbian based N8 and 808 Pureview were among the top 5
besteselling Nokia smartphones and the N9, which runs on MeeGo was the second
bestselling Nokia smartphone in China. Why is the idiot CEO forcing the utterly
undesirable failing Windows based smartphones to the market where Nokia's
Symbian is well entrenched and MeeGo is beloved?

NOKIA ABANDONED ITS ADVERTISING UNIT

• We may not succeed in leveraging the Microsoft
advertising assets to build and achieve the required scale for a Nokia based online
advertising platform on our smartphones that generates new sources of advertising based revenue.

Among his desperation moves, Elop sold the Nokia advertising
unit, while global mobile advertising is doubling year after year after year,
and Nokia had one of the most used mobile advertising platforms of the planet.

WINDOWS DEMOLISHED ANY PROFITS IN SMARTPHONES

• We may not succeed in creating a profitable business
model when we transition from our royaltyfree smartphone platform to the
royaltybased Windows Phone platform due to, among other things, our inability
to offset our higher cost of sales resulting from our royalty payments to
Microsoft with new revenue sources and a reduction of our operating expenses,
particularly our research and development expenses.

Duh. Nokia generated 12.5% profit per smartphone sold when
Elop was only executing the Symbian/Maemo/MeeGo based strategy he was given.
After he foolishily abandoned that, today Nokia's smartphone unit reports 48%
loss generated per every smartphone sold. Yes, its clear, the new strategy was
not able to create a profitable business model. The new strategy has
comprehensively failed. Spectacularly failed. I cannot think of any industry
ever, where a global market leader went from 12% profits to 48% losses in a
period of less than two years (while the industry itself continues to be highly
profitable, so excluding world economic downturns, wars, natural disasters etc)

Note - this is EXACTLY the same problem with Windows that
has previously been observed by LG, Motorola, SonyEricsson and HTC - that out
of all smartphone operating systems and 'ecosystems' the Microsoft one is the
only one that is always the unprofitable one, and anyone who attempts to use
Windows as the primary operating system will only be plunged deeper into losses
(as observed by LG, Motorola and HTC, all who after attempting Windows as the
main OS, soon thereafter shifted their majority (and then all) smartphones to
Android instead. Windows is known to be the loss-making platform. Everybody
knows this. Only a Microsoftian Madman would insist, after two years of damage
and devastation - and ever increasing losses in the smartphone unit - come on,
Nokia was generating increasing profits at 12.5% exaclty two years ago using
Symbian, now when roughly half of all smartphones run Windows at Q3, Nokia
produced 48% loss per every smartphone sold.

PATENTS

• We will need to continue to innovate and find
additional ways to create patentable inventions and other intellectual
property, particularly as we would no longer be developing the core platform
technology for our smartphones under the proposed Microsoft partnership. As a result,
we may not be able to generate sufficient patentable inventions or other
intellectual property to maintain, for example, the same size and/or quality
patent portfolio as we have historically.

If Patents are so valuable, why is idiot-CEO Elop selling
key patents to trolls (and is it not a criminal offense for a Nokia CEO to gift
Nokia patent rights to Microsoft when selling some of those rights to the
patent trolls. Elop must be investigated for this and any illegal
patent-transfer contracts must be revoked)

OPERATORS, DISTRIBUTORS

• The proposed Microsoft partnership may cause
dissatisfaction and adversely affect the terms on which we do business with our
other partners, mobile operators, distributors and suppliers, or foreclose the
ability to do business with new partners, mobile operators, distributors and suppliers.

Touche! Nokia expresses in bold in Form 20-F how vital this
is for Nokia survival. Nokia writes:

Our ability to maintain and leverage our traditional
strengths in the mobile product market may be impaired if we are unable to
retain the loyalty of our mobile operator and distributor customers and
consumers as a result of the implementation of our new strategy or other
factors. (bold in original)

Nokia further explains how much this is a true competitive
advantage and key to Nokia long-term market dominance:

We have a number of competitive strengths that have
historically contributed significantly to our sales and profitability. These
include our substantial scale, our differentiating brand, our worldclass manufacturing
and logistics system, the industry’s largest distribution network and our
strong relationships with our mobile operator and distributor customers.
Going forward, these strengths are critical core competencies that we will
bring to the proposed partnership with Microsoft and the implementation of our
Windows Phone smartphone strategy. Our ability to maintain and leverage these
strengths also continues to be important to our competitiveness in the mobile
phones market. (bolded emphasis added by me)

As
discussed above, however, the proposed Microsoft partnership and the adoption
of Windows Phone as our primary smartphone platform are subject to certain
risks and uncertainties. Several of those risks and uncertainties relate to whether
our mobile operator and distributor customers and consumers will be satisfied
with our new strategy and proposed partnership with Microsoft. If those
risks were to materialize and mobile operator and distributor customers and
consumers as a consequence reduce their support and purchases of our mobile
products, this would reduce our market share and net sales and in turn may
erode our scale, brand, manufacturing and logistics, distribution and customer
relations. The erosion of those strengths would impair our competitiveness
in the mobile products market and our ability to execute successfully our new
strategy and to realize fully the expected benefits of the proposed
Microsoft partnership. (bolded emphasis added by me)

(Wow. This is like text lifted from my blog! I have been
writing here until I was blue in the face, how vital it was for Nokia to
maintain strong carrier relationships and maintain positive dealer
relationships, and I have chronicled here how much Elop's actions have damaged
those relationships.)

On May 31, even before the first full quarter of Elop's new
strategy was in place, Nokia stunned its investors with a profit warning. Elop
admitted being surprised by how much Nokia had been damaged by his statements
and Nokia said in its press release on 31 May about the profit warning that the
main reasons why Nokia was suddenly unprofitable were:- the competitive dynamics and market trends across
multiple price categories, particularly in China and Europe;- a product mix shift towards devices with lower average
selling prices and lower gross margins

So, as of May 2011, the CEO had seen that his strategy is
having severe backlash in China and Europe. At the Q2 results, Elop wrote
"In Q2, our immediate action to manage unexpected sales and inventory
patterns enabled us to create healthier sales channel dynamics." He also added "Most notably we
took action in China and Europe. We have shifted our sales focus and marketing
resources more towards retail interactions with consumers. We made changes in
certain critical sales management."

CAN ELOP FIX PROBLEMS AT NOKIA?

In the Form 20-F Nokia tells us that the carrier/operator and distributor support is vital for the strategy to succeed. So explicitly, that if operator/carrier and distributor support is lost, the strategy will fail. Then immediately at the first profit warnings only weeks after filing Form 20-F, and then a few weeks later, at the first quarterly results under the new strategy, Elop starts to complain about lack of sales support. But he promised he will fix it immediately. Stephen Elop, CEO of Nokia has identified an existential threat to Nokia's strategy. He has publically committed to fixing the problem with operator/carrier and distributor sales support. He has had 18 months to fix that since. How has Elop
succeeded?

Just before he announced his strategy, in Q4 of 2010, Nokia sold
33.5 million handsets in Europe and 21.9 million in China. When Elop reported
that his biggest problem driving growing-profits Nokia to sudden loss-making,
was China and Europe, for Q2 of 2011, Nokia European sales fell by 45% down to
18.4 million units and China (the world's largest handset market) Nokia sales
fell 49% to 11.3 million units. So, Elop announced that he understands the
issue and will fix it. Elop was attributed in The Wall Street Journal saying
"Nokia needs to streamline its distribution channel and ensure
profitability in the region, where local operators such as China Telecom and
China Mobile are playing an increasingly active role in determining the range
of handsets available."

When the Q2 results were released in July 2011, Elop said
"The challenges we are facing during our strategic transformation manifested
in a greater than expected way in Q2 of 2011." So in other words, his strategystumbled right
from the start. The problems ('challenges') were 'greater than expected'
already in Q2. So yes, lets now go see how well Elop has fixed these problems
15 months later. As of Q3 results 2012, Nokia sales in Europe have not
recovered, not even to the same level. They are now down another 9% to 16.8
million. And what of China, the world's biggest market? The Nokia brand has
utterly collapsed, falling another 49% and now Nokia only sells 5.8 million
devices in the market that is growing at breakneck speed.

Note - The new Nokia Windows strategy pushed Nokia away from
low-cost friendly Symbian smartphones to very high-cost Windows Phones. This
bizarre strategy was unveiled when the world market was already going faster to
lower-cost smartphones, and right after Elop announced his strategy, his
company fell victim to the truth. "Lower average sales prices". Has
Elop been able to recover from that since? In Q2 of 2011, Nokia's ASP was 56
Euros. By the end of 2011 (Q4) it was 53 Euros. Now, the latest data we have,
in Q3 of 2012 the Nokia ASP is 43 Euros. When Elop announced his strategy, his
mix of smartphones (high ASP) out of all handsets was 25%. Now, today, by Q3
data, as the world nears 50/50 split of smartphone migration, Nokia's migration rate from dumbphones to smartphones has regressed
towards the lower-cost featurephones, and is only at 7.5% !!! Before Elop took over, Nokia had every single quarter had safely better migration rate from dumbphones to smartphones than the industry average. Every single quarter (and doing that profitably). Now as he pushes Nokia away from smartphones, to dumbphones, Elop is very literally snatching defeat from the jaws of victory.

Most - MOST bizarrely, Nokia had been developing its
low-cost smartphone platform, called Meltemi, which was weeks from announcing
its first low-cost Nokia smartphones for the Emerging World markets like India,
Brazil, Indonesia, China etc - and Elop suddenly cancelled the whole project!
This is like if Sony - the master of portable music with the Walkman brand, had
observed Apple take big market share with the iPod, and then developed its own
MP3 player, and when it was weeks from launch - to truly address the way the
market is evolving, the Sony CEO suddenly kills the project. Weeks from launch!
Instead Elop is offering even more costly new Lumia smarphones now for
Christmas 2012, compared to those from last Christmas. He is like a madman who
looks at the world, sees its night time, and decides its daytime and refuses to
turn on the headlights of his car. Elop is acting 100% against the best interests
of his company, and 100% against the trends of the industry! Elop had 15 months to fix the existential threat to Nokia and has not even stabilized the problem, it just keeps getting worse. Nokia's CEO, Stephen Elop is not trusted by the carrier community/mobile operators & distributors. He has proven to be incapable of rescuing Nokia nor of restoring Nokia's strong carrier relations and distributors.

STAFF MOTIVATION

• The implementation of the proposed Microsoft
partnership may cause disruption and dissatisfaction among employees reducing their
motivation, energy, focus and productivity, causing inefficiencies and other
problems across the organization and leading to the loss of key personnel and
the related costs in dealing with such matters.

Yes. Tons have left.

REPLACED BY INCOMPETENT BUT MORE EXPENSIVE MICROSOFTIANS

• We may not have or be able to recruit, retain and
motivate appropriately skilled employees to implement successfully the Windows
Phone smartphone platform and to work effectively and efficiently with
Microsoft and the related ecosystem.

And worse, by allowing relatively low-paid long-term Finnish
employees to depart, and attempting to replace them - especially to take jobs
at Headquarters in cold Finland - by bringing in experienced West Coast talent
with Ex-Microsoft background etc, he is massively adding to the top-level
compensation all while replacing competent knowledgable experts with
unknowledgable outsiders who clearly do not understand Nokia nor its customers
nor its markets.

TABLET MADNESS

• We do not currently have tablets in our mobile product
portfolio, which may result in our inability to compete effectively in that
market segment in the future or forgoing that potential growth opportunity in
the mobile market.

Ah, the tablets madness. Yes, MICROSOFT may want a tablet,
it would be suicidally stupid for a pure handset maker like Nokia to launch a
tablet PC. The tablet market is very hard to get into, has a totally different
resale channel, pricing model, distribution chain and Nokia has zero brand
there. For any PC maker like Apple or Samsung, a tablet makes sense. For any
pure phone maker like RIM or Motorola - or yes, Nokia, a tablet would be utterly mad - as we can
see from how the Blackberry and Motorola tablets have struggled and plunged both companies into losses (killing Motorola in the process and almost bankrupting RIM too).

RATINGS DOWNGRADES NOW JUNK LEVEL

• The assessment of our proposed partnership with
Microsoft and new strategy could cause lowered credit ratings of our short and
longterm debt or their outlook from the credit rating agencies.

Ah, yes. Moody's, Fitch and Standard & Poors (S&P).
Yes. They might lower their credit ratings. At the time this strategy was unveiled, Nokia had emerged from the global financial crisis with a healthy profit-generating business where most of its rivals were producing losses, and the credit ratings agencies liked Elop and his early first five months of management by raising Nokia's credit ratings to one notch below perfect. One notch below perfect. And yes, Nokia warned that this new strategy might cause that sterling credit rating to be damaged. And you know what happened? The credit ratings agencies did in fact - each of them
downgraded Nokia - incidentially, citing Nokia distribution and sales as the
primary reason at every downgrade. Then they downgraded - each of them - Nokia again, citing what
as the reason? Again the sales and distribution problems. And they downgraded
Nokia again and again and again, sometimes as severely as two notches at a
time, until all three ratings agencies now rate Nokia as junk. Ah. Yes. If you
were near perfect by the ratings agencies, and in a period of just over a year,
you are downgraded so many times you are now junk - that is total failure of
your strategy and yes Elop has precided over the biggest strategic management
catastrophy of all time. If this was an earthquake in Japan causing a Tsunami and nuclear evacuation, that would be understandable. If this was an oil spill in the Gulf of Mexico, this kind of a series of ever worse downgrades would be (or could be) understandable. But what happened at Nokia was a totally unnecessary self-inflicted wound to Nokia, by the arrogant, ignorant CEO who refused to deal with reality and continues to live in some parallel universe of delusion in his mind. This series of Nokia downgrades was caused by the Elop Effect, and CEO Elop's inability to stop the sales erosion and carrier boycott. Which brings me to..

CARRIER BOYCOTT

Remember what Nokia testified to the SEC and NYSE in its
Form 20-F ? Nokia wrote the following

We have a number of competitive strengths that have
historically contributed significantly to our sales and profitability. These
include... the industry’s largest distribution network and our strong
relationships with our mobile operator and distributor customers. ...Several
of (the) risks and uncertainties (of the proposed Microsoft partnership) relate
to whether our mobile operator and distributor customers and consumers will
be satisfied with our new strategy and proposed partnership with Microsoft.
...The erosion of those strengths would impair our competitiveness in the
mobile products market and our ability to execute successfully our new strategy. (emphasis added by me)

At the Q2 results of 2011, how did Nokia report the carrier
support of the new strategy? "During the second quarter 2011, distributors
and operators purchased fewer of our devices across our portfolio as they
reduced their inventories of Nokia devices." (emphais bolding added by me) And specifically smartphones?
Nokia announced "the sequential decrease in our Smart Devices volumes was
driven by distributors and operators purchasing fewer of our smartphones during
the second quarter 2011 as they reduced their inventories of those
devices." (emphasis bolding added by me)

So how did Elop manage to fix this? Did he get the carriers
onboard to love the Windows strategy? Elop told the Nokia annual shareholders
meeting in April of 2012 (as reported by Finland's largest newspaper Helsingin
Sanomat, in response to a direct question of does Nokia have a distribution
problem, that: "If the operator
doesn't want us, it doesn't want us. We will appeal to them with other
arguments." (Note, quote is from Helsingin Sanomat, directly quoting
Stephen Elop at the Annual Shareholders Meeting). Elop openly admits Nokia has
now a severe problem with its operators/carriers and distribution. A year
earlier, in Form 20-F, Nokia proudly said it has "strong relationships
with mobile operators and distributors" which were the industry-best and a
clear competitive advantage Nokia held over all its smartphone maker rivals.

Now, a year after Elop's strategy, he admits to the Nokia shareholders meeting,
that yes, there is such a severe problem with many operators, that some don't
even want Nokia, period. That he, Elop, has to now try to appeal to those
operators by winning them back. And yes. The Nokia smartphone sales at that
time (Q1 data) was 11.9 million units. Now, six months after Elop tries to 'argue' with the operators to win them back, how is he doing? The latest quarter
has Nokia smartphone sales (Q3 data) down 47% from that level !!!! Nokia sold
6.3 million smartphones after Elop tried to 'argue' with the operators. He lost
half of what little customer base Nokia had left - AFTER he admitted carriers/operators hate his strategy
and many are refusing to sell Nokia. He lost almost half his market in the past
six months. How incompetent is that?

By the way, the Helsingin Sanomat quotation was MY
translation of the actual published Finnish translation from original English
as spoken by Elop. The Helsingin Sanomat quote is in fact, a slightly shortened
version of what Elop actually said. His full statement has been released in
full video and actual transcript. I have not taken the significant point about
carriers hating Nokia out of context, but yes, a more accurate full transcript
of 12 sentences has been released by Nokia. I won't bother us with the full
text here. The point is, that Elop admitted to the Nokia shareholders that many
carriers refuse to sell Nokia smartphones now after the Microsoft strategy was
released, and Elop admitted that the Microsoft partnership was explicitly the
cause of that sales boycott. And more than that, this fact was published (in
Finnish) by Finland's largest newspaper reporting from the Nokia shareholders'
meeting, and that story was also reported widely by the global press in other
languages.

Separately, Finnish biggest TV broadcaster YLE reported that Elop was asked
directly about Nokia market share in relation to resale problems (what I have
been calling the Nokia sales boycott for now for nearly two years already).
Elop's answer, according to YLE was that Elop hoped "that sales staff
in retail outlets would offer Lumia handsets to customers asking for a mobile
phone." Elop admits to Nokia shareholders on the explicit question, yes there is a retail problem - akin to a sales
boycott - where retailers HAVE Nokia smartphones in the store, but are refusing
to sell them. Refusing to show Nokia customers those phones when Nokia
customers ask for them. This problem has been independently verified by press
studies into various handset markets relating to Nokia smartphones overall, and
the Lumia series specifically, from Finland to France, from New York to
California, from UK to Hong Kong by countless press stories. But the fact was
settled by Elop in April 2012, when he openly admitted that in stores where
Nokia smartphones were in stock, the sales staff were refusing to show
customers Nokia smartphones, even when asked by name!

That was in April 2012, when the latest Quarterly data (Q1) had
Nokia still holding 8.1% market share in smartphones. Had Elop been able to fix
that problem? He released tons of new Lumia smartphones and lowered prices and
massively boosted marketing expenses and added new operators to his
distribution since then. But the retail boycott is continuing, or why else is
Nokia's market share only six months later (Q3) at 3.7%?

MARKET EROSION IS IRREVERSABLE

• Our mobile operator and distributor customers and
consumers may no longer see our Symbian smartphones as attractive investments
during the transition to Windows Phone. This would result in a loss of market
share, which could be substantial, during the transition and which we may not
be able to regain when quantities of Nokia Windows Phone smartphones are
commercially available.

Yes, how clear. Nokia smartphones using Symbian had 35%
market share in 2010 just before this strategy was announced. The 'mobile
operator and distributor customers' did not indeed support the 'Osborned'
operating system. By the time Lumia smartphones were launched one year ago for
Q4 in 2011, the Nokia smartphone market share had plummetted to 14%. To call
the loss of six out of every ten customers you had in just nine months as
"loss of market share which could be substantial" is a severe
understatement.

Has Elop's wonderful Windows strategy now managed to regain
any of the lost 19% of market share? Hardly. Since Q4 of 2011 when Windows
Phone based Lumia smartphones were launched by Nokia, the market share has continued in total
freefall and was now 3.7% by Q3 of 2012.

THE MIGRATION DID NOT SUCCEED

• We may not succeed in transitioning over time our
installed base of Symbian owners to our Windows Phone smartphones.

Yes. That is now obvious. After Lumia launched in Q4 of
2011, Nokia has not recovered ANY of its past 35% market share. The attempts
have failed totally to try to "succeed in transitioning over time our
installed base of Symbian owners to our Windows Phone smartphones."

After Lumia was launched in Q4 of 2011, this is how poorly
Nokia has "succeeded" in transitioning the installed base of Symbian
owners per quarter:

In the four Quarters that have reported so far, Nokia has
attempted a total of 13.2 million Symbian users per quarter to be migrated to
Windows Phone (ie a total annual customer base transition attempt of 52.6
million loyal Nokia smartphone users). Of those in how many cases did Nokia
"succeed in transitioning over time" the installed base? The level at
Q3 of 2012 was 2.7 million per quarter (10.8 million on an annual basis). Nokia
has lost four out of every five conversion attempts SINCE Lumia has launched!
(If we count from when the strategy was announced, and the full Elop Effect, in
reality it is 9 out of every 10 customers Nokia had.) If Elop was able to
sustain roughly a one-to-one transitioning level of Symbian to Windows Phone - what Elop promised with his new Windows based strategy - then he could at least claim modest 'success' to this strategy. (incidentially, I personally would NOT consider abandoning a 'guarateed growth' path on Symbian/MeeGo for only 1-on-1 no-growth stable transition to Windows, when the industry doubles every 18 months, but thats perhaps me, I prefer growth and profitable business in mobile, not stagnant business. But lets not talk about Tomi's higher standards, lets keep this only to Form 20-F and what Nokia warned two years ago)

So, as Nokia
bleeds 4 customers to rivals for every attempt to shift a Symbian customer to
Windows Phone, the Microsoft-based Lumia strategy is pure suicide for Nokia and
must be terminated immediately. Those customers must be given alternative Nokia
smartphones that run on MeeGo and Symbian that conform to Nokia customer
expectations (like great cameras, some QWERTY form factor alternatives, great
connectivity from unrestricted Bluetooth to microSD card slots and FM radios, etc)

WINDOWS WILL NOT BE BELOVED

• The Windows Phone platform may not achieve or retain
broad or timely market acceptance or be preferred by ecosystem participants,
mobile operators and consumers

Duh. Microsoft had a 12% global market share for Windows
smartphones once, briefly in 2007. It was briefly the
world's second most popular smartphone ecosystem behind the far bigger Symbian
and just ahead of the rapidly growing Blackberry and iPhone operating systems
at the time. You can definitely call 12% ie one in eight smartphones sold as
being a "preferred ecosystem" for some "mobile operators and
consumers". For 2010,. just before Nokia partnership was announced, the
combined market share for the older Windows Mobile and newer Windows Phone
smartphones for Microsoft had fallen far from that level. It was 5%. To try to push Microsoft as "preferred
ecosystem" at that time was utterly misleading. Microsoft had 5% market
share with the ecosystem that was bought only by one in 20 consumers and was
ranked 5th behind the massively bigger Symbian, Android, iOS and Blackberry.

But certainly, it was 'plausible' in February of 2011, when
the two CEOs, Stephen Elop of Nokia and Steve Ballmer of Microsoft strutted on
the stage together, that Nokia and Microsoft could turn their two worlds into
one big ecosystem. That was plausible at the time, not likely, but plausible.
Now we have the facts. Windows Phone was seen so poisonous and undesirable,
that many Windows Mobile equipment maker partners bailed out even before
Windows Phone launched, like the Top-10 smartphone manufacturers SonyEricsson,
Motorola and LG. After Windows Phone launched, Dell quit the partnership,
Samsung announced a new operating system to be directly a competitor of Windows
Phone (called Tizen, with smartphones to launch in 2013). Now after Windows
Phone 8 launched, HTC has reduced its offering and ZTE and Huawei have decided
not to bother to launch any smartphones on this new operating system. Every one
of these smartphone makers had shifted their attention to another or other
smartphone platforms, usually Android (although Dell has since also quit the
smartphone business altogether).

What do they know at Samsung, HTC, SonyEricsson ie Sony,
Motorola, LG, Dell, ZTE and Huawei, that only the Microsoft Muppet CEO Stephen
Elop cannot see? Its that Windows Phone is utterly undesirable. From 12% in
2007 to 5% in 2010 to 2% in 2011 to yes, 1.9% in Q3 of 2012, and - if the
usually very good predictor Kantar early market sales numbers prove to be
accurate - an expected about 1.5% for Q4 of 2012. The Windows Phone platform has
not achieved "broad or timely market acceptance by mobile operators and
consumers". Windows Phone has comprehensively failed to gain any traction
at all! Understand, after Nokia was added to the Windows ecosystem, the world's biggest smartphone maker and the world's biggest dumbphone maker Nokia, since then Windows market share has shrunk! Not grown, shrunk! Windows was the 5th biggest ecosystem at the time, it is now the 6th. (Oh, and watch this space, after Tizen launches on a couple of handsets and manufacturers, it may push Windows to 7th ecosystem, haha, during late 2013.. At least Tizen - like MeeGo before it - has strong carrier support, whereas Nokia CEO tells Nokia shareholders that carriers hate Windows Phone)

ABANDONING FIRST-MOVER GAINS

• Other competitive major smartphone ecosystems have
advantages which may be difficult for us to overcome, such as first-mover
advantage, momentum, engagement by developers, mobile operators and consumers
and brand preference, and their advantages may become even greater during our
transition to the Windows Phone platform.

Oh man, this hurts so bad. Yes, "first mover advantage" - how about
Mobile Money? Did you read in the Harvard Business Review where Google Chairman
Eric Schmidt wrote last year that Google's number two priority now is mobile
money? Where is the Google Money? It is still coming, as part of Google Wallet
and various NFC etc related experiences. And what of Nokia? Nokia has launched
Nokia Money years ago. Nokia had 12% of the mobile money market share in India
- the world's second largest mobile market behind only China - and where
regular banking is underserved and mobile money is growing at breakneck speeds.
Nokia was ahead of Google on Google's number two priority, in the second
biggest mobile market. Who is that smart that they get ahead of Google in tech? Who gains a first-mover advantage
over Google? (and what idiot CEO abandons the lead where Google says in public this is their number 2 priority? Why isn't Elop celebrating Nokia's lead over Google and showcasing Nokia Money as the prototype Google should follow?)

Nokia Money was 100% compatible with Symbian, with MeeGo and even
with S40 based featurephones of Nokia that sell in large numbers in India. But
Nokia Money was not compatible with Windows Phone. So what did Elop do? He decided to act against Nokia's best interests, just to please Microsoft! This is against his fiduciary duty as CEO, and Elop must be investigated for this kind of acts against Nokia's best interests! Nokia did
not expand his Nokia Money-oriented Emerging World market handsets running
Symbian, MeeGo and S40 for India that could have secured Nokia tremendous
competitive advantages and loyalty hooks into this decade. Rather? He shut down
the unit! He did not even sell it! 12% market share in India's rapidly growing
mobile money market. And Elop shut it down. Yes, Nokia is fully capable of
first-mover advantages if built on Symbian or MeeGo or even S40, but not using
Windows Phone.

What of the N9? The MeeGo based smartphone was released in 2011 and immediately
got massive positive responses everywhere. In 2012 it was rewarded by the
D&AG Awards (the "Oscars" of industrial design) as the best
designed device of 2011, not just besting the Lumia smartphones, but besting
the iPad 2 ! Who beats Apple at design? Nokia did, thats who. And did Mr
Microsoft Muppet allow the huge publicity in Britain at the D&AG Awards be
used to help promote and sell the N9 in all of Nokia's major markets? No. Elop
rather refuses to let the N9 be sold in the biggest European markets including
- yes, the UK (where the D&AD Awards are handed out).

Brand preference? Wanna really cry? The German newsmagazine Der Stern loved the
N9 so much, it told its readers to travel to Austria or Switzerland to go get
one, because Nokia was not selling the N9 in Germany (Europe's biggest
smartphone market where Nokia had 49.5% market share in 2010 according to
Kantar). Note, this is not a techie magazine but a weekly newsmagazine like
Time, doing a smartphone review! And they reviewed a smartphone not even sold
in Germany! And they loved it so much, they did actually recommend their
readers to go to another country to get one. Nobody achieves that level of
brand love (this side of Apple's iPhone). And did Elop rush to Germany to be
pictured on the cover of the very next issue of Der Stern holding the N9 in
many colors and promising the German readers that yes, of course the N9 will be
immediately launched in Germany and its sister phone, the N950 will also be
soon? No. Elop forbids selling the N9 in Germany! No wonder Nokia's market
share is down to 5.6% (Symbian and Windows Phone combined) in Germany now in
November 2012, according to Kantar's latest numbers.

Nokia is fully capable of building highly desired, beloved, award-winning
handsets - and on Symbian and on MeeGo they are not artificially restricted by
all the weird limitations that Microsoft has built into the compromise that is
the Windows Phone 8 operating system. Symbian was open source, had at its peak
over 20 equipment manufacturers as partners as well as operator/carrier
partners. Nokia's MeeGo OS was also an open source system with many handset
vendors and carrier partners. Windows Phone is a closed system, where Microsoft
holds a dictatorial control over its world and its equipment maker partners are
deserting the platform and not one carrier has signed onto it. But its not like
they don't want to. The MeeGo platform that Elop abandoned? Samsung took over,
renamed it Tizen and has today - get this - Telefonica (Spain's biggest
operator/carrier) as a carrier partner, as well as NTT DoCoMo (Japan's biggest
operator/carrier), SK Telecom (South Korea's biggest), and others such as
Sprint of the USA. Its not that the carriers do not welcome and wish for a
'third ecosystem'. But very clearly they have comprehensively rejected
Microsoft and Windows Phone.

DAMAGED NOKIA BRAND

• Our brand preference may erode due to various factors,
such as inadequate marketing, quality issues, lack of affordable locally
relevant services, applications and content or lack of success in smartphones.

And yes, that too has happened. Nokia's brand had been in
the top 10 most valuable brands every year since the list was released. After
the Elop Effect, the Nokia brand fell out of the Top 10 for the first time ever. How
much of that damage has resulted in the Nokia handset average sales price
falling (which was growing when Elop took over), or the Nokia costs of
marketing going through the roof just to move handsets (Nokia profits were
growing when Elop took over, the handset units profits vanished and have
produced ever bigger losses ever since) and how much has it hurt Nokia market
share - was 35% in smartphones in 2010 when Elop took over, and was 3.7% in Q3
of 2012, the latest Quarter for which we have data.

SOURCING PARTS

Talking about sourcing parts, components and subassemblies: Additionally,
with the increased bargaining power of other large manufacturers in the mobile
device and electronics industry, we may not be able to achieve as favorable
terms as in the past resulting in increased costs that we may not be able to
pass on to our customers.

Yes. In total handset production, Nokia was 50% bigger than
Samsung in year 2010. Today Samsung is 25% bigger than Nokia. In Smartphones,
where most of the innovation is happening, the issue is even more pronounced.
Smartphones have far more features and abilities, and more technical
sophistication within those matters. Thus in smartphones Nokia faces a far more
broad range of critical components and subassemblies. In 2010, Nokia was not
just the largest smartphone manufacturer in the world, Nokia was twice as big
as Apple and four times bigger than Samsung. Today (latest Q3 data) Nokia has
tumbled to 10th largest smartphone manufacturer meaning Samsung, Apple, Huawei,
Sony, ZTE, HTC, Lenovo, RIM and LG are all now bigger than Nokia and have more
scale-based advantages in sourcing parts and negotiating bulk discounts. In Q3
just in smartphones, today Apple is 4 times bigger than Nokia, Samsung more than 8
times bigger.

CLOSING FACTORIES

In the Form 20-F, Nokia reveals that it ran 10 factories
that made handsets. Seven of those (Finland, China, Romania, Hungary, South
Korea, Mexico and Brazil) were able to produce smartphones. In 2010, Nokia's
total smartphone production was 103.6 million units or 35% of the global
smartphone production capacity. To understand the scale, Apple sold 47.5
million smartphones that year and none of those iPhones were made at Apple
factories, they were physically manufactured at various Foxconn factories in
China. No rival smartphone manufacturer exceeded Nokia's 2010 smartphone
production capacity in the year 2011, even as the industry grew 63% that year!
Only in year 2012, has Nokia's massive smartphone capacity of year 2010 been exceeded
by Foxconn and by Samsung.

The Form 20-F reveals that on contract manufacturing (such
as Compal of Taiwan, which made the first Lumia handsets), Nokia warned "In
future, we may increase the use of contract manufacturers to produce in the
normal course the entire product, which is subject to certain risks."
Nokia wrote a long list of possible problems that this might introduce,
concluding: "Such failures or interruptions could result in our
products not meeting our and our customers’ and consumers’ quality,
safety, security and other requirements, or being delivered late or in
insufficient or excess volumes compared to our own estimates or
customer requirements, which could have a material adverse effect on our sales,
results of operations, reputation and the value of the Nokia brand."
(emphasis in bold added by me)

Remember, Nokia had when this strategy was announced, by far
the world's largest mobile phone handset manufacturing capacity, with a
globally placed set of factories, of the utmost modern design, capable of
handling in perceived proportion the mix of low-cost high-volume featurephone
handsets, and the higher cost smartphones. Nokia had 10 handset factories
spread across the planet, near the customers. There was no lack of ability to
build smartphones in Nokia's own factories, yet Stephen Elop went to the
bizarre option of using an outside company, Compal, to build the first Nokia
Lumia handsets. That was, as can be seen from the above, with predictable
results. The early Lumia handsets were built with considerable amount of bugs,
production flaws and problems that caused a lot of PR damage to Nokia,
necessitating recalls, replacements, total new software re-installs, purchase
discounts and refunds. The outsourced production was a disaster and damaged the
launch and early perception of the whole Lumia brand as well as Nokia overall.
There was the further problem of having committed to certain volume levels of
production that Nokia could not then adjust, something it could have easily
done with its own factories.

The worst aspect is, that Nokia's own smartphone production
ability, when the Lumia series was launched, was already running at more than
60% idle! So Nokia carried the costs of its own factories idling, while
Taiwanese Compal was charging outsourced production premiums, while delivering
underperforming quality problem ridden products. To even suggest this kind of stupidity, is a sign of a totally incompetent CEO. Elop has no concept of how to run his own company. He had his OWN smartphone factories at 60% idle, yet he purchases outside production for the first Lumia series. He is a moron. He has to be fired.

As the Nokia smartphone market has continued to shrink,
today out of total Nokia smartphone production capability Nokia used to have,
more than 90% has been idling. As to featurephone/dumbphone capacity, Nokia has
receeded about 25% from its peak capacity two years ago, so one quarter of its
high-volume dumbphone factory capacity has also been idling. Nokia has thus
shut down or sold several of its factories as this incredible amount of
overcapacity was so large, Nokia's own management admits by these actions,
Nokia will not be returning to its old levels of production! Nokia has totally
failed in the strategy and abandoned a key competitive advantage out of scale
and the resulting production capacity advantage which traditionally is a very
long-term competitive advantage that is very difficult for smaller rivals to
match or exceed. Nokia gave it away and admitted comprehensive failure of this
aspect, by selling or shutting down several handset factories already.

Note that of the seven factories Nokia had that were capable
of producing smartphones, two have been shut down completely or sold (Finland
and Romania). So Mr Elop's strategy has definitely resulted in Nokia's total
maximum capacity being so severely damaged, Nokia's maximum smartphone
production capacity is down 29% from what Nokia had in 2010. Thus, if you ever
thought Nokia would 'return' to just the levels of smartphone sales it did in
year 2010, of 103.6 million smartphones, think again. That Nokia sold or shut
down 29% of its smartphone production capacity - even after the debacle of
disasterous experimentation with outsourced production - means Nokia's own
management knows it cannot return to over 100 million per year smartphone sales
levels or beyond, in the foreseeable future.

Remember, a phone handset factory project is a costly investment in the several
hundreds of millions of dollars that takes years just to get the factory up and
running. These decisions are not taken lightly. So, Stephen Elop initially
promised his strategy would, as Form 20-F said "This strategy
recognizes the opportunity to retain and transition the installed base of
approximately 200 million Symbian owners to Nokia Windows Phone smartphones
over time." And the time-period for this transfer was, as Nokia wrote:
"We expect the transition to Windows Phone as our primary
smartphone platform to take about two years." (emphasis in bold
is by me).

But well before the two-year window is even closed, Elop has
already admitted he will come nowhere near his goal to 'retain and transition'
the existing Nokia Symbian customer base to Windows Phone on Lumia. He has so
far lost 9 out of every 10 Symbian customers he even attempted to migrate. And
he has sealed the fate of Nokia's ability to compete as the world's biggest
smartphone maker, by selling 29% of his factory capacity in smartphones (but
not sold any of the capacity in high volume low-cost dumbphones).

How much capacity does Nokia have? We do not know how close
to peak capacity the factories in 2010 ran, but roughly speaking as Nokia's own
smartphone sales grew 52% from 2009 to 2010, they must have been highly
utilized already. If we take 29% out of the capacity in 2010, it means Nokia
management, under Elop, looking realistically at the market demand for Lumia,
now suggest by factory closings, the peak Nokia capacity is somewhere near 74
million smartphones. This starting year, 2013, the world will buy about 1
Billion smartphones and if Nokia were to fully sell its maximum capacity in
smartphones - that would only give Nokia 7% market share this year!

Elop's strategy suggested he is capable of transitioning the
total Nokia customer base from Symbian to Windows Phone. Nokia owned more than
a third of the global smartphone market when he said that, and Nokia's
smartphone sales grew more than Apple, more than Samsung and more than RIM that
year, doing it profitably (with increasing profits to the end of the year). One
third of the world's smartphones would be 333 million smartphones in 2013.
Samsung will be doing roughly that level. Nokia could easily have done as much,
if Elop had not meddled with Nokia's dominating smartphone strategy at the
time. Instead, in year 2012, Nokia sold only about 35 million smartphones. Elop
has destroyed nine out of every ten loyal customers relationships Nokia has
had, and Elop has now admitted defeat by his actions by limiting Nokia's ability even to compete
with the biggest smartphone makers anymore.

NOKIA SET ITS OWN STANDARDS - AND BY THOSE IT HAS FAILED

I end with the same quotes I had in the above. This blog is not Tomi Ahonen's listing of what all is wrong with Nokia's strategy (there is much more that is rotten, beyond these 20 items). This Is Nokia's own list of risks it testified to when filing to the SEC and NYSE. Nokia very
VERY clearly indicated what was the biggest risk to the risky Microsoft
strategy. Nokia wrote in the Form 20-F

Our ability to maintain and leverage our traditional
strengths in the mobile product market may be impaired if we are unable to
retain the loyalty of our mobile operator and distributor customers and
consumers as a result of the implementation of our new strategy or other
factors. (bold in original)

Nokia further explained how much this is a true competitive
advantage and key to Nokia long-term market dominance:

We have a number of competitive strengths that have
historically contributed significantly to our sales and profitability. These
include our substantial scale, our differentiating brand, our worldclass
manufacturing and logistics system, the industry’s largest distribution
network and our strong relationships with our mobile operator and distributor
customers. Going forward, these strengths are critical core competencies
that we will bring to the proposed partnership with Microsoft and the
implementation of our Windows Phone smartphone strategy. Our ability to
maintain and leverage these strengths also continues to be important to our
competitiveness in the mobile phones market. (bolded emphasis added by me)

As
discussed above, however, the proposed Microsoft partnership and the adoption
of Windows Phone as our primary smartphone platform are subject to certain
risks and uncertainties. Several of those risks and uncertainties relate to whether
our mobile operator and distributor customers and consumers will be satisfied
with our new strategy and proposed partnership with Microsoft. If those
risks were to materialize and mobile operator and distributor customers and
consumers as a consequence reduce their support and purchases of our mobile
products, this would reduce our market share and net sales and in turn may
erode our scale, brand, manufacturing and logistics, distribution and customer
relations. The erosion of those strengths would impair our competitiveness
in the mobile products market and our ability to execute successfully our new
strategy and to realize fully the expected benefits of the proposed
Microsoft partnership. (bolded emphasis added by me)

Understand what this means. Nokia testified in the SEC
official filing of Form 20-F that Nokia historically had the world's largest
distribution network, which was one of Nokia's biggest competitive advantages.
Nokia also testified it had strong carrier relationships with mobile operators
and distributors. These too were critical competitive advantages that Nokia
held when Elop took office.

Today nobody suggests Nokia has the strongest distribution - Elop himself has
been abandoning Nokia distributors and pissing them off, who have gone, in most
cases from Russia to Africa - to Samsung, who now have clearly the biggest
distribution network in mobile.

Worse, Nokia's very survival depends on the support of the
operators/carriers. Nokia testifies so in Form 20-F "Whether our operators and distributor customers (are)
satisfied with our... partnership with Microsoft" and how critical is
that? Nokia testified in the filing of Form 20-F that "the erosion of
these strengths woudl impair our ... ability to execute successfully our new
strategy and reaslize fully the expected benefits of the proposed Microsoft
partnership." If the operators/carriers and distributors refuse to support
fully the Microsoft Windows strategy, the strategy is not viable. It cannot
succeed without the operators supporting it!

Not my words. Words of Nokia filing for the SEC in Form 20-F. Nokia saying the
Microsoft strategy would "be impaired if (Nokia) is unable to retail the
loyalty of the mobile operators and distributors."

Elop reported to the Nokia Shareholders Annual Meeting in
April that "Indeed, Microsoft did buy the Skype company as part of the
ecosystem that comes with Windows Phone and Windows." What do these operators/carriers think of
Skype? "The feedback from operators is they don’t like Skype, of
course." Why? Elop explains because "it could take away from
revenues." and the kicker on are the carriers onboard with Nokia and
its Microsoft strategy? Elop told Nokia shareholders "And, so what
Microsoft has done – and we’ve been part of these conversations as well with
operators – is as you correctly say, if operator doesn’t want Skype installed
on a Windows Phone from Nokia or any other company, then the operator can make
that decision."

Elop told Nokia shareholders this April - six months after
Lumia had launched and more than a year after the Microsoft strategy had been
revealed - that operators/carriers did not like it, "of course", many were refusing to take
ANY handsets that use the Windows Phone operating system - like say NTT DoCoMo,
the biggest carrier of Japan - and the reasn they don't like the Microsoft
partnership with Nokia is "Skype, of course". So well known is the
operator/carrier hatered of Skype, that Elop added 'of course' to his statement
to Nokia shareholders. Everybody knows this. Not my words - Elop's words. Of
course the carriers hate Skype.

Skype was not in-built into Windows Phone 7. Windows Phone 7 sold at its peak,
just over 4 million units per quarter this year. Windows Phone 8 does have
Skype fully integrated not only to the Nokia Lumia handsets, but integrated to
the 1.2 Billion desktop PCs that Microsoft is now upgrading to Windows 8. If
the operators "don't like Skype, of course" almost a year ago, now,
that Skype is fully integrated - they positively hate it now with Windows Phone 8 and Skype fully integrated.

This is not Elop's mistake. Elop did not buy Skype for Microsoft. This is
Ballmer's call. He wanted Skype to help keep Microsoft relevant in an internet
age for personal computers. It may help Microsoft on the desktop, but it
positively killed Nokia's chances on Lumia and Windows Phone. Microsoft
purchased Skype in June of 2011. Microsoft had 2.4% global smartphone market
share at that time across its Windows systems. Since then Motorola, LG,
SonyEricsson and Dell have quit the Windows ecosystem (and several said or
hinted that the operator/carrier demand had dried up). Samsung has reduced its
Windows based portfolio and launched its own OS, Tizen - which has half a dozen
carriers/operators SUPPORTING the new OS. And HTC has reduced its offering on
Windows Phone.

After sacrificing all those millions of Nokia Symbian
customers to try to retain some market, how is Windows Phone today? The Q3
numbers had Microsoft's market share at 1.9% and the early view to Q4 (using
usually reliable Kantar numbers as a guide) suggest Windows Phone to have about
1.4% market share in Q4.

Elop told Nokia shareholders "The feedback from operators is they don’t
like Skype, of course."

That is the operator/carrier response to Nokia's Microsoft
partnership. They simply hate it. When Ballmer commented on how Windows Phone
was doing as Nokia was ramping up in 2011, Ballmer said in September 2011
Windows Phone sales were "below expectation." That is not a success of a so-called 'third ecosystem'. And then, any
disagreement by Elop over at Nokia? In May 2012 - yes, after AT&T had
launched Lumia even in the USA, Elop's words on how Windows was doing with
Nokia Lumia? Elop said the sales were "below expectations". What was Elop's
latest statement about Windows Phone 8 market performance? That some early tech
reviewers like the new phones and that Elop told CNet on December 10 that he
was "certainly pleased" with how the new Lumia were selling - that is not a roaring success either, but then notice this - Elop admits on The Next Web that yes, Nokia had not run a large production of the
new Lumia, so this 'pleased' level of sales is out of very small initial
production run (far less than how Nokia ramped up Lumia the first time). And
meanwhile, many independent analysts who do channel checks, have all said that
Nokia sales are sluggish or below early expectations in Q4. As I said, the
Kantar numbers that I analyzed, suggested worldwide Windows Phone sales are
down (but Symbian sales for Nokia are up? Wouldn't that be ironic).

SKYPE KILLED THIS STRATEGY

Only minutes after the Microsoft partership was announced by Elop on 11
February, 2011, I was writing on Twitter that this was good for Microsoft but
deadly for Nokia. I warned that Nokia's market share would collapse and Nokia's
smartphone business would become not viable and Nokia would become Microsoft's
slave and become a low-cost box-mover like Dell in PCs. But, I did say and
write, on Twitter and on my blog at that time, that this partnership might work
out for both parties. It was not likely, but it was plausible.

When Microsoft bought Skype, I was immediately on Twitter and on my blog
explaining that the Skype purchase had effectively killed the Windows strategy
for Nokia. I was the first person to say so in writing or in public. In March
of 2011, Nokia told in its SEC fillings, in Form 20-F that the whole Microsoft
strategy would depend on whether the mobile operators would "be satisfied
with our partnership with Microsoft". One year after that, in early April,
Elop had to confess to Nokia shareholder that there was no love for the
Microsoft partnership. That even as Elop himself had been sitting in meetings
that Microsoft had with carriers, the carriers hated Skype so much, many were
not taking Windows Phone at all, and all carriers hated it. Or in Elop's words "The
feedback from operators is they don’t like Skype, of course."

Of course

The feedback from the carriers is that they don't like
Skype. Of course.

The mobile operators/carriers are refusing to support Nokia in its Microsoft
Windows Phone strategy. Elop has heard it for now two years. He keeps
complaining that there is no carrier support or that it is weak. Whatever
promises he gives us - like that T-Mobile would bring big USA success, or
AT&T would bring huge US success, etc, prove to be total fabrications.
Before Elop announced the Microsoft partnership, Nokia sold 11.1 million mobile
phones in the USA. This year 2012 (with Q4 an optimistic estimate by me) after
the full Lumia launch in the USA, Nokia's total USA market sales is .. 2.1
million handsets!

The feedback from the carriers is that they don't like
Skype. Of course.

THIS IS THE PERFECT PICTURE OF STRATEGY FAILURE

In 2010 Nokia had 35% market share in smartphones and
Microsoft had 4%. The soon-to-be-announced partnership had a combined market
share of 39%. Then this happened:

Nokia sold 103.6 million smartphones in 2010. Nokia GREW
smartphone sales in 2010 by 53% from the year before. Nokia added 35.8 million
new smartphone customers during 2010, compared to 22.4 million new smartphone customers added by Apple,
17.0 million added by Samsung and 13.4 million added by RIM. The numbers do not lie. This means that in 2010, globally, Nokia
was growing faster than its nearest rivals - the gap between Nokia and the pack
chasing it, was growing wider, not narrower.Who grows faster than Apple's
iPhone?Who grows faster than Samsung, come on! And Nokia was doing this
profitably, with increasing profits.

Nokia was towering over its rivals, more than twice as big as its nearest rival
in 2010 !!! That is more global domination than Toyota has EVER had in cars (or
General Motors when it has been biggest, either - ever!). And Nokia's gap to
the pack was growing, not shrinking when Elop took over. He had stepped into a
winning platform play, Symbian was the bestselling smartphone OS in Latin
America (which has more mobile phone users than North America) and the
bestselling smartphone OS in Europe (which is bigger than Latin America); and
the bestselling smartphone OS of Africa (which has more mobile users than North
and Latin America combined); and the bestselling smartphones OS of Asia (bigger
than North America, Latin America, Europe, Australia and Africa - combined).

Nokia was the bestselling smartphone and Symbian the bestselling OS in 2010. Nokia's Symbian was also by far the most widely used smartphone OS by installed base, the most used smartphone OS on five of the six inhabited continents (and even Nokia had the most used smartphone of the uninhabited Antarctica, where Nokia's Linux-based Meamo was the favorite of scientists using smartphones and preferring the open source Linux software for the N900).

Not just most sold, and biggest installed base. Nokia had the second bestselling smartphone App Store, behind only Apple's - ahead of Blackberry, Android, Palm and Windows - and
the gap to Apple at the time was closing, not growing. Nokia had by far the world's largest army of software developers. Nokia was about to release its new MeeGo operating
system we saw winning all sorts of awards on the N9 smartphone which many
called better than the iPhone - something the Lumia series is never said to be
in any major tech reviews and comparisons.

This all, Elop threw away with a strategy so risky, Nokia
itself admitted if the strategy did not work out, Nokia not only would lose its
smartphone leadership, it might even damage its dumbphones/featurephones
business. Yes, this was the most boneheaded management move of all time. And
now the time is up for Mr Elop.

MR ELOP, YOUR TWO YEARS ARE UP

Nokia wrote in the Form 20-F "We expect the
transition to Windows Phone as our primary smartphone platform to take about
two years." The exact two-year milestone will be on 11 February, 2013,
in about 40 days from today. I expect many business, telecoms and strategy
writers to re-examine the Nokia failure in its Microsoft strategy at that
point. Lets now use Nokia's own standard for how to measure success or failure
of its strategy, as Nokia told us in the Form 20-F.

Nokia warned that if the Nokia strategy with Microsoft were
to fail, most likely Nokia would then become a low-margin box-mover basic handset
maker. This is what Nokia wrote:

Our proposed partnership with Microsoft and change in our
smartphone platform strategy are subject to certain risks and uncertainties,
which could, either individually or together, significantly impair our ability
to compete effectively in the smartphone market. If that were to occur, our
business would become more dependent on sales in the mobile phones market,
which is an increasingly commoditized and intensely competitive market, with
substantially lower growth potential, prices and profitability compared to the
smartphone market.

Here are some of the risks that Nokia identified what might
go wrong, that did, in fact go wrong:

Explicit Risk 1 Windows Was Weak - "Windows
Phone is an unproven addition to the
market focused solely on high end smartphones with currently very low adoption,
and the partnership may not succeed in
developing it into a sufficiently broad competitive smartphone platform. That
"very low adoption" when the partnership was announced, was 2%. At
the latest Quarter (Q3) that market share had fallen to 1.9%. It may fall to
1.4% by Q4. Yes, very obviously the Windows Phone platform has failed in
developing into a "sufficiently broad" platform.

Explicit Risk 2 Cannot Differentiate - "Windows
Phone platform may not enable us to produce smartphones that are differentiated."
Nokia traditionally had the most diverse smartphone portfolio. Today the
Lumia series is the least diverse series. Samsung has obviously stepped in to
offer the broadest portfolio and taken a huge lead in smartphones.

Explicit Risk 3 Cannot Get Scale - The Microsoft
partnership may not achieve in a timely manner the necessary scale, product
breadth, geographical reach and localization to be sufficiently competitive in
the smartphone market. Nokia sold 29 million smartphones per quarter when
Elop took over. It now sells about 6 million per quarter.

Explicit Risk 4 Ruin China while Not Gaining in USA
- The Microsoft partnership may erode our brand identity in markets where we
are strong like China and may not enhance our brand identity in markets where
we are weak like in the United States. Before Elop announced this mad
strategy, Nokia was the overpowering number 1 in China the world's largest
smartphone market, with over 70% market share. That is now down to about 5%.
Did that sacrifice translate into a USA success? No. The Nokia smartphone
market share in the USA was 6.8% using Symbian, it is now less than 2.9% in the
USA using both Windows Phone and what remains of Symbian.

Explicit Risk 5 Nokia Mobile Advertising Fails - We
may not succeed in leveraging the Microsoft advertising assets to build a Nokia
based advertising platform on our smartphones. Yes. Elop "Mr
Ecosystems" simply sold away the Nokia-owned mobile advertising unit when
his strategy was burning too much cash.

Explicit Risk 6 Profitability Ruined - We may not
succeed in creating a profitable business model when we transition from our
royaltyfree smartphone platform to the royaltybased Windows Phone platform. Nokia
profits from smartphones every single quarter they have been manufactured up to
Elop's new strategy. In year 2010, when the world was still emerging from the
global economic crisis and most of Nokia's rival full-portfolio handset makers
were reporting losses, Nokia's the smartphone unit generated 1.5 Billion Euros
(2 Billion US Dollars) of profits. And remember, the profits were growing at
the end of the year, showing the biggest jump in profitability Nokia
smartphones had ever seen. Since Elop's strategy Nokia's smartphone unit
generated a loss in 2011 of 400,000 Euros (about 520,000 US dollars) and now,
using consensus opinions of Q4 results, Nokia will report roughly a loss of 1.1
Billion Euros (1.4 Billion US Dollars) in its diminishing smartphone unit in
2012. So Mr Elop has destroyed over two years, about 5.9 Billion dollars in
profits for Nokia Corporation (why is this Microsoft Monkey allowed to remain
as CEO? This is complete madness!)

Explicit Risk 7 Patents - We may not be able to generate sufficient
patentable inventions or other intellectual property to maintain, for example,
the same size and/or quality patent portfolio as we have historically. And
in efforts to raise cash to cover for the destructive Microsoft strategy, Nokia
has been selling its patents in big bunches to various Patent Trolls, poisoning
the well of future wealth

Explicit Risk 8 Operators & Distributors Abandon
Nokia - The proposed Microsoft partnership may cause dissatisfaction or
foreclose the ability to do business with mobile operators, distributors and
suppliers. So "cause dissatisfaction" - Elop admitted to Nokia
shareholders that mobile operators do not like the partnership, because of
Skype, "of course." So clear is the explicit dissatisfaction in the
carrier community that Elop added 'of course' when he was asked on point about
that question. And worse, "to foreclose the ability to do business"
with operators/carriers & distributors? Yes. That too was explicitly
admitted by Elop at the annual shareholders' meeting, that yes, some operators
who traditionally bought Nokia handsets now refuse any Microsoft Windows Phone
based smartphones. The numbers could not be more explicit. Before this
strategy, Nokia sold 29 million smartphones per quarter. Since then the
industry has more than doubled. Now after the Nokia reseller boycott, Nokia
only manages to sell 6 million smartphones per quarter.

Explicit Risk 9 Damage Employee Morale - The
implementation of the Microsoft partnership may cause disruption and dissatisfaction
among employees leading to the loss of key personnel. The exodus of Nokia
staff has been dramatic and devastating including several of Nokia's
longest-standing sales and marketing staff as well as Nokia's top technical
staff starting with its CTO.

Explicit Risk 10 Damage Recruitment - We may not
be able to recruit and motivate appropriately skilled employees to implement
the Windows Phone smartphone platform and to work effectively and efficiently
with Microsoft and the related ecosystem. The proof is in the pudding,
again. The Lumia series launch (and relaunch) have been plagued with all sorts
of implementation problems and failures from faulty hardware and software to
almost instant massive price discounts to feuding with thought-leaders and
bloggers and astroturfing and fake Amazon ratings, to faked 'Pureview' pictures
etc etc etc.

Explicit Risk 11 Ongoing Tablet Diversion - We do
not currently have tablets in our portfolio. There is no doubt, that
Microsoft - Microsoft not Nokia - would prefer to see tablets in the Windows
Phone ecosystem. For any handset maker like Nokia, to turn a non-profitable
smartphone unit and refocus any of its scarce resources to try to build a
world-beating (iPad-beating) tablet would be foolish. Mobile phone handsets are
distributed, marketed, priced and sold totally differently from tablet PCs. A
traditional PC maker like Apple or Samsung that has the distribution and sales
already for the traditional PC market, would be wise to launch tablet PCs. A
pure handset maker like Motorola or RIM (or Nokia) would find it hopelessly
loss-making to try to enter that market - witness RIM and Motorola. For Nokia's
CEO to even entertain a tablet fantasy without putting a clear stop to any such
projects and prospects, shows he is thinking like a Microsoftian, not a Nokian.
He is not fit to run Nokia the handset manufacturing giant that is currently in
distress. A tablet rumor should be killed comprehensively by the CEO as a
luxury Nokia cannot now afford (And besides, the tablet OS should have been -
would have been MeeGo, considering the Nokia N9 smartphone beat the iPad as the
best design of 2011 at the D&AD Awards).

Explicit Risk 12 Damaged Credit Rating - The partnership
with Microsoft and new strategy could cause lowered credit ratings from the
credit rating agencies. Yes. Nokia was nearly perfect by all three credit
ratings agencies on February 10, 2011, one day before this strategy was
announced. Within 15 months of this strategy being announced, all three credit
ratings agencies had downgraded Nokia so many times, Nokia was rated (and still
is, obviously) junk by all three credit ratings agencies. It is one of the
fastest destructions of a credit rating by any global market leader in any
industry and all by itself serves as proof that Elop is one of the worst CEO's
in the economic history of corporate governance.

Explicit Risk 13 Symbian Collapse - Our mobile
operator and distributor customers may no longer see our Symbian smartphones as
attractive during the transition to Windows Phone. This would result in a loss
of market share, which could be substantial, during the transition and which we
may not be able to regain when quantities of Nokia Windows Phone smartphones
are commercially available. Totally prophetic. Nokia's Symbian market share
was 29% when Elop took over. He promised a 1 to 1 transition from the Symbian
base to the Windows Phone base. But the 'Osborne Effect' and the 'Ratner
Effect' both caused by Stephen Elop communications during February 2011, caused
a collapse of Symbian sales. During 2010, Symbian based Nokia smarpthones had
grown more than the iPhone in absolute terms globally, grown more than Samsung,
grown more than Blackberry. The gap between Nokia and its rivals had been
growing, not shrinking before this strategy. Immediately after Elop announced
his strategy, the Symbian sales growth stalled and reversed into an
unprecedented fall. Nokia branded Symbian based smartphone sales fell from 29%
market share when this strategy was announced to 14% in only three quarters, by
the time the first Lumia branded Nokia smartphones running Windows Phone were
launched. Elop himself caused the collapse in Symbian sales by calling his own
products rubbish (in the infamous Burning Platforms memo, the costliest
management communciation of all time) ie the 'Ratner Effect' and the
simultaneous announcement of his current platform as obsolete with no
replacement devices on the new platform ie the 'Osborne Effect'.

Explicit Risk 14 Transition Failure from Symbian to
Windows Phone - We may not succeed in transitioning over time our
installed base of Symbian owners to our Windows Phone smartphones. The math
is undeniable. For every 10 attempts Nokia has made of its Symbian users to
migrate to the Lumia series running Windows Phone, nine have failed! Only one
in ten Symbian users from 2010 has so far been successfully migrated to Windows
Phone while nine have gone to rivals, mostly Samsung and Apple. The transition
failure is comprehensive, and this before we remember that the Yankee Group
independent survey of new Lumia owners in 2011 found that 4 out of 10 new Lumia
owners was so disgusted with their new smartphone, they ranked their
satisfaction worst on the scale. Yes, worst smartphone they have ever seen, say
4 out of 10 Lumia owners. This is not a success. There is the infamous 101
faults list for past Nokia owners to try to migrate to Windows Phone (upgraded
with even more Elop, now with 121 faults) and the very latest analysis at All
About Symbian still finds major faults in so many Nokia 'staples' in features
regular Nokia smartphone owners on Symbian (And Maemo and MeeGo) expect, that
are still absent from Windows Phone, like the ability to see the time on the
idle screen (bearing in mind, of the planet's population, a Nokia branded phone
is the world's most used watch, ahead of Timex, Casio, Citizen etc). Like the
lack of full file transfer on Bluetooth, like the lack of data transfers via
NFC. Like the lack of microSD support (in all but one smartphone). Etc etc etc.
The Lumia series resale price is nonexistent, meaning in most markets where
phones are sold at full prices (no subsidy) the resale market is ruined as
well, meaning the Lumia series is unsuited for Africa, India, Indonesia, etc
etc etc.

Explicit Risk 15 Windows Will Not Be Beloved by Consumers
• The Windows Phone platform may not achieve broad market acceptance by
consumers. Very obvious. When this strategy was announced, Windows on
smartphones was the world's fifth-bestselling smartphone OS (when adding
Windows Mobile and Windows Phone based smartphones). That was to replace
Symbian which at the time was the world's bestselling and the world's most used
smartphone OS. Today Windows Mobile has been extinguished, and Windows Phone
remains. Has it grown from 5th ranking to get better consumer acceptance? No.
Windows Phone now ranks as 6th most used smartphone OS, behind Android, iPhone
and Blackberry - and the new Samsung bada OS - and insult to injury, still
trailing Symbian. The latest Kantar numbers suggest that for Q4 we will see
Windows Phone market share decline while Symbian market share would increase!
By every conceivable measure, it is obvious, that after the biggest marketing
spend by any handset maker of all time, with Nokia initial global launches of
Lumia, supported by billions more by Microsoft including giving away free Xbox
360 game consoles, and supported by the biggest-ever new phone launch marketing
efforts by carriers like AT&T in the USA - Windows Phone has fallen from
5th most used smartphone to 6th most used. It is not beloved by consumers.
Windows is despised by consumers.

Explicit Risk 16 First Mover Advantage Lost - Nokia first-mover advantage (may be lost) during our transition to the Windows Phone
platform. Yes. Apple is rumored to bring NFC to the iPhone 6. Nokia had NFC
on Symbian and MeeGo well before Windows Phone. The first Lumia series did not
even support NFC. Google is calling 'mobile money' its number 2 strategic
priority. Nokia had its Nokia Money launched commercially years before and was
strong for example in India. That is now abandoned because Windows Phone does
not support the technology. Nokia had the magnificent camera with 41 megapixel
sensor in the Symbian based 808 Pureview but Windows Phone does not support
that pioneering technology. Now Samsung has launched the Galaxy Camera
smartphone with the biggest optical zoom and best camera on the market. Nokia
is losing its first-mover advantages to Apple, to Google and to Samsung. All
because of Windows Phone.

Explicit Risk 17 Nokia Brand Damaged - Our brand
preference may erode due to the lack of success in smartphones. Nokia was
ranked in the Top 10 most valuable brands by Interbrand every single year that
survey was published, and ranked number 7 when Elop took over. Nokia
immediately fell out of the Top 10 after the new strategy was announced.

Explicit Risk 18 Lose Scale Advantage in Sourcing Parts
- "We may not be able to achieve as favorable terms as in the past
resulting in increased costs that we may not be able to pass on to our
customers." The sourcing issue is so damaged, even several of Nokia's
long-standing suppliers have gone from healthy profits to loss-making.

Explicit Risk 19 Cause Damage by Outsourcing Production
- "We may use contract manufacturers to produce the entire product, which
could result in our products not meeting our customers’ and consumers’ quality requirements."
The original Lumia 800 and Lumia 710 launch was so riddled with faults that
Nokia resellers were reporting Nokia-record returns. Both first Lumia handsets
were completely badge-engineered by Compal of Taiwan, using non-standard Nokia
parts, and the new Microsoft operating system. So nothing in the first Lumia
was true Nokia except perhaps the brand pasted onto the cover and the sexy
physical design that was stolen from the MeeGo based award-winning N9. Its like
if Porsche took the classic design of the 911, and then asked low-cost car
maker Tata of India to manufacture a look-alike 911, with an engine not from
Porsche but from low-cost car maker Proton of Malaysia and then just sticked on
a Porsche sticker on the hood and tried to sell that as the new 911 - with
classic 911 prices mind you - in Porsche stores to loyal Porsche customers. I
think the conversion rate would probably be about 9 Porsche customers lost for
every 1 retained, and most of those who actually bought this fake Porsche would
be incredibly unsatisfied. Its prices would fall within weeks of the first
launch (exactly as happened with the Lumia 800, exactly as happened again with
the Lumia 900, and exactly as is now happening already with the Lumia 920!!!)

Explicit Risk 20 Destroy Manufacturing Capacity - The
most difficult-to-achieve, most costly barrier to entry to scale in smartphones
is manufacturing capacity. Nokia had built a huge lead in its manufacturing
ability, with 10 handset factories around the planet of which seven could
manufacture smartphones. Nokia had in 2010 the ability to produce one in three
smartphones sold on the planet. Since the Microsoft strategy was announced, the
global smartphone market has grown by 2.4 time. Elop promised that his strategy
would take 2 years and he would replace the existing Symbian smartphone sales 1
to 1 by Windows Phone sales. But his strategy has failed so comprehensively,
that Nokia has been shutting down factories and selling them. The total
production ability of smartphones for Nokia is down 29% since Elop took over -
and those were not inefficient old factories, those were highly modern, new
factories of highly automated specialized ability. Now we hear that Huawei, the
world's third largest smartphone maker has moved into Finland to start a new
manufacturing plant there to take over from the skills that Nokia has
abandoned.

By closing its factories, Nokia so expressly admits this strategy has failed,
that it has already shut down 29% of its smartphone production ability from
Nokia's peak in 2010, while since then the global market has more than doubled
in size. And Elop's actions point to how low Nokia thinks its maximum ceiling
now is with Windows Phone - even if all smartphone factories run at full
capacity, Nokia's global production could only manage about 7% of the
smartphone market demand for this year 2013. That is, under 'perfect case'. You
may find that many Nokia analysts are now saying the Windows Phone startegy is
such a comprehensive failure, they expect Nokia smartphone market share this
year to be nearer to something like 2% or 3%..

TWENTY REASONS WHY NOKIA STRATEGY HAS FAILED

When testifying to the US Securites and Exchange Commission via the required
Form 20-F about this radical change to Nokia strategy, Nokia wrote that there
were explicit risks, which "could, either individually or together"
impair öur ability to execute successfully our new strategy."

So some of those 20 items I analyzed in the above might alone derail
Nokia's Windows based strategy, or others might 'together' cause the strategy
to fail. Now we know. Nokia experienced huge growth in smartphone sales in
2010. The sales turned into decline in 2011 immediately after this strategy was
announced - and the decline has worsened quarter after quarter. Nokia towered
over its rivals in 2010, twice as big as Apple, four times as big as Samsung.
Now Nokia has shrunk to 10th in smartphones with an ever-shrinking share and
might fall out of the Top 10 by Q4 results. Nokia's record-setting growing
profits in the smartphone unit that generated more than 2 Billion dollars of
profits per year have now been replaced by ever worsening losses, Nokia
generated over half a Billion dollars of losses in its smarpthone unit in 2011
and more than 1.4 Billion dollars of losses now in 2012. The operators/carriers
and distributors hate the Windows strategy - Elop himself admits it "of
course" and points out that many carriers/operators refuse to sell Nokia
Windows Phone handsets altogether. The Nokia brand is damaged, the Nokia
ratings agencies hate this direction rating Nokia as junk. The Nokia share
price which had grown 11% in the first five months of Elop's tenure to over
8.20 Euros has collapsed to 3 Euros and Nokia is regularly under take-over
speculation, even as Elop fires tens of thounsands of staff and sells
factories, units, patents, the Nokia Headquarters buiding etc.

The Windows Phone based strategy has failed. Its not me saying so. It is what
Nokia warned when this strategy was unveiled. Nokia filed its Form 20-F which
gives us the failure standards, how do we know if the strategy has failed. It
was not me who wrote those risks into that testimony, it was Nokia. And now
when we examine those points, we find that yes, Nokia's strategy has
comprehensively failed.

Elop must be fired for thrusting profit-making market-dominating Nokia into
this self-destructive path. Elop must be fired for continuing on this ruinous
path even as he saw clearly it cannot succeed (the most obvious evidence being
when smartphone factories are sold or shut down). Elop must be fired for horrid
execution of the plan - witness the total failure of Windows Phone even in the
new Lumia launch now - where Elop 'learns' from his mistakes and after Lumia
first time lost market share and saw collapsing sales, he now raises prices,
reduces distribution, cuts operators (the idiotic "exclusive"
operator-deals which even Apple wanted to get rid of as soon as it could,
stating exclusive deals are not capable of supporting large scale sales) and
limits the portfolio with ever less differentiation. The Lumia Windows Phone
launch year of 2012 was a disaster. Now, with the new steps, Elop is
guaranteeing that the Re-Launch of Lumia for 2013 will be worse still. Why is
the Microsoft Muppet allowed to remain in control of Nokia? His strategy has
failed on 20 counts. He must be fired now!

These were not ' Tomi's petty reasons' to blame Elop. These were 20 risks that Nokia testified in Form 20-F to the USA Securities And Exchanges Commission and New York Stock Exchange last March, that were risks that could destroy the Microsoft strategy announced in February of that year. This form clearly says, that Elop's strategy would take 2 years to complete. On February 11, 2013 we will have 24 months from the start of this strategy. The last Quarterly data for Nokia related to this strategy is coming now in January (fro Q4 of 2011). The Microsoft Windows strategy for Nokia has comprehensively failed, at least on those 20 points, several which alone will destroy the strategy - not my words, so said Nokia.

I will post this long blog now to start the year, for those who may want to reference this and dig for themselves. I will return to some of these topics with some updated diagrams and numbers to explore some of the failures in more detail in the coming days and weeks.

Note, this blog was 100% on risks and problems Nokia identified 2 years ago. Stephen Elop has mismanaged Nokia but he has done far more damage to Nokia, both in smartphones and elsewhere than just these 20 risks that Nokia itself identified. I wrote last summer my 'definitive' piece on the biggest faults of Stephen Elop as CEO. If you want to read another monster-long Tomi Ahonen blog about management failure, and learn the lessons of how Elop through his mismanagement accomplished these risks to come true (and other damage to Nokia), read The Sun Tzu of Nokisoftian Microkia.

Lets do the disclosure part - I am an ex-Nokia employee. I was not fired by Elop haha, I left in 2001, back in the very good days when Nokia was still growing as the giant. In my last job I was at headquarters heading Nokia's global consulting unit which served the major international carrier/operator giants like China Mobile, Vodafone, T-Mobile, Orange, Telenor, etc so I saw not only what Nokia strategy was but I was personally and deeply involved in seeing how the carriers/operators formed their strategies. I have been used by Nokia over the years as their consultant including at various public events from Finland to Pakistan and from Egypt to Colombia. The first of my 12 books was listed as an 'official Nokia book' and sold through the Nokia website. A Nokia President has written the foreword to one of my books. So I am not holding any kind of grudge against Nokia. I have been both supportive of - and very critical of Nokia before Elop came to town. I have been both supportive and critical of Elop based not on any personal vendetta, but on what he has actually done. Clearly being the biggest management failure of all time not just in telecoms or tech, but in any industry, ever, Elop has managed to accomplish more lunacy than any other CEO in a comparable period of time. Hence, most of my writings about Elop over the past two years have been negative, but not all. I was for example very supportive of him and Nokia when the N9 was launched or the 808 Pureview etc.

Note that I consult for the industry, my refernce customers include just about every giant of the industry and I have been equally critical of past giants stumbling in the handset industry such as Palm, Motorola and RIM. I am not here because I somehow hate Elop (or because he slept with my wife, haha, very funny theory someone once suggested) - I am here as an honest expert giving my honest view when a company is making dramatic mistakes. The release of the Burning Platforms memo WAS a huge mistake - I said so here immediately, and Elop himself has admitted it caused damage to Nokia. I was here to say that when Microsoft bought Skype that was good for Microsoft on the desktop but would damage Windows Phone smartphone sales - and again, Elop himself admits now that it is true, that operators hate Skype 'of course' and many refuse to even carry Windows Phone based smartphones. I called Elop for creating an Osborne Effect and a Ratner Effect - I was not alone in either of those observations, now most tech analysts agree that it is what he did. And so forth. I am calling it as I see it, if Elop stopped making colossal mistakes - like now "exclusive" carrier deals which further damage Lumia market success - not my view, that was the industry consensus view when Elop announced it - if Elop stopped making mistakes, I would stop criticizing him. This is not about hating Elop, this is about loving Nokia. I still am an optimist, I love Nokia, and I hope Nokia can somehow survive, shifting quickly to Android or - more likely - that it might be bought by a friendly new owner that the Nokia brand might still survive and mean something. After all, it was Nokia that invented the smartphone and utterly dominated this market until Elop came in to destroy Nokia's leadership position.

On shares. This blog makes no recommendations on any share prices, I do not personally own Nokia shares and I do not allow discussion of share prices and stock markets in the comments.

Why am I obsessing about this story? Because this IS the biggest catastrophy in the mobile industry, and one that keeps evolving, going from bad to worse. This is a bigger disaster than Siemens exit in phones, Motorola's collapse from number 2 handsets, far greater failure than Palm falling from number 2 in smartphones. This is bigger than the damage Toyota saw from its brakes problems and recalls. This is bigger than problems British Airways witnessed with the catastrophy at Terminal 5 opening, or BP saw with the Oil Spill, or Exxon saw with the tanker fiasco of the Exxon Valdez, or Coca Cola experienced when attempting to launch New Coke (and note - Coca Cola wisely brought back Coca Cola Classic alongside its new 'platform'). This IS the biggest story in telecoms and tech. Elop has precided over the biggest management failure of all time, and the most rapid collapse of a global market leader - in any industry, ever. He is the biggest failure CEO ever. He is a loser of a boss. These stories must be chronicled and lessons learned so that the mistakes of Stephen Elop will never be repeated by anyone. His name must be synonymous with comprehensive - self-induced - market destruction. I write this story, because I am an analyst of this industry - and wrote 'the' book on how this industry makes its money. If we are witnessing a world record being made in incompetence in this industry - in how money is lost - then yes, I must write this story or I would not be honest to my craft. And I will continue reporting on Nokia's troubles as long as it continues on this mindless suicidal path, of course.

One plug - if you noticed, I have no ads on this blog, I have written more than two million words over six years on topics relating to mobile, telecoms, tech, media and the internet on this blog. We have had over 3 million visitors and have had over 30,000 comments posted here. Yet note, no ads. We have no registration, we don't harvest your emails, this blog is not for sale. I am here only to share with my loyal readership, many of those people posting comments have been on this blog for years. I am already the most published author of my industry, Forbes rated me the most influential expert in mobile, what more could I want? I have zero interest in anything else except sharing my best insights where I can - and often I have been wrong - and I am the first to announce here on this blog whenever I am wrong (how many 'mobile experts' bother to do that?). I've spoken at over 350 public conferences to a cumulative audience of over 100,000 in over 60 countries on all six inhabited continents. I have over 500 press references. What more could I want? I am not writing this to 'try to get visibility' haha, everyone in my industry knows me, most major CEOs in this industry have autographed copies of my books in their bookshelves. I do this only for my readers. I only share my thoughts with my readers out of a passion for sharing. But in my day job I am a consultant and author - I am the most published author in the mobile industry and my books are already referenced in over 120 books by my peers - a truly phenomenal achievement considering my first book is less than 11 years old. So for anyone who needs to understand the mobile handset industry and business, please see my TomiAhonen Phone Book 2012 for the latest industry data and stats.

December 24, 2012

A very accurate predictor of the current Quarter smartphone sales trends is a population-weighted average of the most recent Kantar numbers of the current quarter, compared to the previous quarter. We've now seen the pattern for many quarters and Kantar's numbers foretell very accurately what is the global reality on a very short term view, ie now in late December, with November sales data, we have a good view to Q4 (October-December) quarter sales.

Windows Phone 8 was supposed to excite the world and restore Microsoft and Windows to smartphones (yeah, when have we heard that before, and before, and before, and before). Nokia's brand new Lumia 920 and 820 were supposed to be the best Windows Phones ever made and somehow magical in restoring Nokia's past glories from America to China. With the parallel launch of Windows 8 for the PC environment, the Microsoft powered ecosystem was supposed to be on a big comeback. Well, I don't specialize in the PC world but rumors from that side suggest Windows 8 has been far worse in its early adoption than say Windows 7 was. This does not suggest a glamorous Christmas Quarter for Redmond on its main business. Well, at least we have the new Nokia Lumias and the HTCs and Samsungs and others doing the 'magnificent' new Windows Phone 8 smartphones, right? Enter Kantar.

KANTAR SUGGESTS WINDOWS PHONE SALES ARE DOWN FROM Q3 !!

Kantar always gives us some of its markets it studies, not all. This time from the November 2012 stats they published, we have a good comparison to September Kantar data (both before Windows Phone 8 launched, and data that was reported in Q3). The regions that Kantar reported both in September and November are the European big 5 countries ie EU5 (Germany, France, UK, Italy and Spain), plus the USA, Australia and Brazil. When we take the population-weighted averages of those four regions, and calculate the Windows Phone market share then and now, we get this finding:

Kantar numbers population-weighted average for these 4 regions in Q4 suggested a global average market share for Windows Phone to be 5.3% (don't worry that the reality was only 2%, remember this is not a 'globally representative' sample of Kantar data, this sample strongly over-samples Windows OS's best markets, USA and Europe, and ignores the huge smartphone markets where Windows is negligable, such as China, India and Japan. The point we want, is to compare Kantar last quarter vs Kantar now.

What does Kantar measure for those same four regions now, for November? The weighted average of those same four regions says Windows Phone new sales market share has fallen to 3.8%. Yes, a drop of one third! So what was 1.9% global Windows Phone market share in Q3, these Kantar measurements suggest that after Windows Phone 8 was launched, the global market share for Windows Phone is now crashing to 1.3%. We rounded it to 2% last quarter (was almost 3% in the previous quarter) and Kantar numbers suggest we will round off the Windows Phone market share for Christmas at 1%. That is catastrophic.

Now, remember, the Christmas Quarter, Q4, October to November, does always feature a big jump in smartphone sales. I am modelling a 30% jump from Q3 data. So while the Windows Phone market share is down by a third (according to Kantar measurements) the actual sales are not down by much. If the global smartphone market grew 30% for Christmas, then the total global Windows Phone sales (both platforms, old Windows Phone 7.x and new Windows Phone 8) would be about 2.9 million units.

By The Way.. I did warn you, that the new Lumia 920 and Lumia 820 sales will underperform at Nokia compared to the first Windows Phone launches a year ago. I explained what factors were wrong, mostly in the executive management by Stephen Elop the CEO, who raised prices, not lowered them - raising prices means less sales. Who also limited his carrier relationships, limited distribution means less sales than broad distribution. Etc Etc Etc. I told you so...

ANY OTHER CONTRADICTORY DATA?

But wait, how about China! Yeah, Nokia's Lumia 920T that will launch for China Mobile on the Chinese proprietary 3G standard, TD-SCDMA, will not launch until January. So no help there. What of other Chinese smartphone sales on Windows? Informa has just reported that Windows Phone market share in China is 1%. When Analysys, Gartner and IDC have given China numbers for their latest reports, none mentioned Windows Phone at all, it is that small.

So don't expect miracles out of China. What other news? HTC is so disappointed in Windows Phone 8, it is withdrawing its lowest-price (best-selling) Windows Phone smartphone, the 8C from many markets including the US. And Samsung? Is focusing on its new Tizen devices for next year, don't expect Sammy to waste too much of their marketing efforts on the undesirable Windows platform right now.

Kantar numbers suggest Windows Phone, after Windows Phone 8 has launched, will still sell less than Windows Phone did in Q3? That is very bad news for Microsoft and for Nokia. But now lets look at the shocker.

SYMBIAN SALES GROWING SUGGESTS KANTAR

And this second bit of data must be devastating for Espoo and anyone near Nokia strategy. It is now 9 months from the last new Symbian based smartphones released by Nokia. The model range is obsolescent. The customers are being peddled new Windows Phone based smartphones instead. Yet those old pesky Symbian based Nokia smartphones have many of the features and abilities that Nokia owners want - like great cameras, like real physical QWERTY keyboards, etc. And what does Kantar data suggest? Those 4 Kantar-reported regions, weighted average suggested Symbian sales in Q3 of 7.7% in these four regions. And now? They suggest 7.5% market share for the same four regions. After we factor in the growth in sales for the Christmas quarter, the data suggests Nokia Symbian sales have jumped from 3.3 million to 4.3 million !!!

KANTAR NUMBERS SUGGEST 6.8 MILLION TOTAL NOKIA SMARTPHONE SALES

Like I said, the Kantar numbers are very accurate in short-term forecasting smartphone OS platform performance for the current quarter. And these findings suggest total Nokia smartphone sales of 6.8 million units for Q4 which they also suggest, would split 4.3 million on Symbian (and MeeGo), and 2.5 million on all Lumia, old and new, on Windows Phone. So compared to Q3, when Nokia only sold the 'undesirable' and suddenly 'obsolete' early Lumia smartphones, and now when the new Windows Phone 8 has launched, Nokia Windows based smartphone sales would be down by 13% while the industry grew 30% in the same period (real effective loss in unit sales of 43% in a 3 month period, after the new platform had launched). I call this a disaster.

And the customers? They refuse Windows Phone but they still accept Symbian (and MeeGo). So Symbian/MeeGo sales would be up - based on the Kantar numbers - from 3.4 million in the last quarter to 4.3 million now - an increase in absolute terms of 27% in Symbian sales from 3 months ago, but after we factor in the market growth, its slightly less than the 30% growth of the market, so Symbian would only lose 3% of its share in this past 3 months - with utterly obsolete and uncompetitive phones! (and zero management support of any kind). Incidentially, my recent spot-check of Chinese online sales of handsets found two Lumia devices as Nokia's bestselling smartphones in China. And two Symbian devices - the 808 Pureview and ... the N8 !!! (Why does moron-CEO Stephen Elop not give us a Lumia with 12mp camera, if the N8, at two YEARS of age, still is a top 5 bestselling smartphone in the biggest smartphone market on the planet? Hello?)

And do you really want to cry? Nokia' second best-selling smartphone in mid December online sales in China was.. the N9 running MeeGo. A smartphone that is 15 months old, but still outsells all Lumia smartphones except one and outsells all Symbian smartphones by Nokia. Why is idiot Elop not fully supporting the N9, selling this magnificient smartphone in every market, and launching its sister phone the N950 to the world? What is wrong with the brain of the CEO? And why is the Board still allowing the clueless Microsoft Muppet to run Nokia. He should have been fired long ago. The worst CEO of all time! (PS the continued very strong sales of the N9 and MeeGo suggest very promising starts for two new smartphone operating systems that launch next year - Sailfish the MeeGo next version that will power Jolla smartphones from Finland; and the Tizen alliance which will see first smartphones launched by Samsung and Lenovo in 2013. Tizen is what Samsung too of Nokia-discarded MeeGo and its partnership, and transformed now as a Samsung-led Tizen alliance. With such partners - PARTNERS - as NTT DoCoMo, Sprint, Telefonica, SK Telecom etc - some of the biggest mobile operators/carriers in the world)

If Nokia smartphone overall number is 6.8 million for Q4, that would be slightly up, 8% up, from Q3 and no doubt, the snake-oil-salesman ultimate spin-doctor-in-chief Stephen Elop of Nokia would proudly celebrate that his smartphone unit had growth. Don't be fooled, as the market grew 30%, it means effectively Nokia lost more than one fifth (in mathematical terms, the competitive decline is 22% of its market share last quarter) of its feeble remaining market position just over the past 3 months. Not 'grew by 8%' but rather, lost one fifth of what remained. Nokia's market share in smartphones - which was 29% just 24 months ago - would now fall from 3.7% in Q3 to 2.7% now in Q4. This, if Kantar's numbers are accurately indicating the total global market reality. Do remember, that Brazil is included in this data, so its not just the rich world markets we are looking at.

WINDOWS PHONE EVEN WORSE

And Windows? The Kantar numbers do suggest Windows Phone sales collapsing from Q3 to Q4. Market share falling from 1.9% to 1.3%. Total global Windows Phone sales falling from 3.3 million in Q3 to 2.9 million now in Q4. What collaborative data do we have? We hear that in most markets the Windows Phone based Nokia Lumia smartphones have been selling out. Selling out sounds good. Until we see what trick Nokia CEO has now been playing. The Next Web quotes Elop and runs a story on 20 December explaining that Nokia has deliberately run low initial rates of Lumia 920 and 820 unit production for Christmas, to help create buzz and demand and a feeling of success. Elop admits in his CNet interview on 21 December that "there's frustration due to limited supply. Our focus is on broadening distribution."

Deutche Bank analysts have severely downgraded their Lumia sales numbers saying their market checks reveal far lesser actual sales than initial hype suggested. And remember, if the mix of Windows vs Symbian phones is now reversing to more Symbian, it means Nokia average sales prices would plummet for Christmas, and likely loss-making in the smartphone unit again increase. Last Quarter the Windows Phone unit made a 49% loss per every Lumia smartphone sold. How much worse can it get?

Then the other Windows Phone partners? I mentoined HTC reducing its Windows Phone 8 offering, including pulling the HTC 8C from many markets and not launching its large screen Windows Phone smartphone. HTC is focusing on where the profits and customers are - on Android obviously.

We'll see soon enough in January, but yes, I am now quite confident in my previous early gut-feeling forecast number that 6.8 million is roughly the level of Nokia total smartphone sales for Q4. The mix of Lumia on Windows Phone vs Symbian is very likely to switch to more Symbian!! So I expect Nokia to have about 63% of its smartphones now in Q4 running still on Symbian/MeeGo and only 37% running on all variants of Windows Phone.

Meanwhile, globally, Windows Phone would have something in the order of 1.3% market share for Christmas and sell 2.9 million units. It would still remain smaller than Symbian now 22 months after Elop decided to sacrifice Symbian and MeeGo instead of Windows Phone. When Palm - once the world's second biggest smartphone platform - had fallen to about 1% market share (and very unprofitable), it had its mercy killing, being sold to HP and ended. How long will Ballmer keep the massive-losses-generating Windows Phone platform even alive? It will soon go the way of the Kin and the Zune and Microsoft will shift its focus only on the PC and tablet side of the Windows 8 operating system.

How long does Nokia have as a company? I said a year ago it was a dead-man-walking. I expect Nokia to be sold any day now.. In reality, lets see how the US fiscal cliff is sorted out, some sanity and stability is restored to Wall Street, and perhaps all those giant tech and consumer electronics giants sitting on billions of cash, will finally feel it safe enought to start the bidding war on the corpse that is Nokia, mostly obviously for its rich patents portfolio - did you notice again, Nokia picked RIM's pockets again on a patents fight, like it did with Apple about a year ago, etc. So realistically? Lets say a good time frame for when the Nokia take-over battle will happen could be around February-March'ish of 2013.

For those who took part in our Crowd-sourced forecast, remember, a little over a year ago, I asked my Twitter followers to suggest what market share Microsoft Windows Phone would have now at Q4 of 2012. The forecasts ranged from 0.4% to 43.2% with the average suggested at 10.1%. Haha, if Kantar numbers do foretell a reality near 1.3%, then currently the nearest guesses are with Gibson Tang, Maarten Lens-FitzGerald, Josie Fraser and Ben Fletcher. Good luck to all contestants. See the full contest and all entries here: Crowd-sourcing a forecast for Windows Phone.

Note: an early edition of this blog posting mistakenly identified the HTC handset as 8X when it is the 8C that is being pulled. The blog is now corrected.

One plug - For anyone who needs data and numbers on the handset industry, remember my TomiAhonen Phone Book with all the charts, numbers, data you would ever need to know, in a convenient pdf eBook formated for small screens so you can carry all the data right on your tablet or smartphone.

December 19, 2012

The nice thing with a strongly-growing giant industry is, that all the numbers keep growing, eh? The unfortunate side effect is, that almost any number you bother to memorize, becomes obsolete within months... But lets do this again. All major mobile numbers, now updates for End of Year 2012:

This is the big number. Update all your slides, we now are at 6.7 Billion active mobile phone 'subscriptions'. Obviously that is not in reality 94% of humans, as many of us have two phones or even three or more cellular connections (two smartphones and a tablet PC for example) and in many especially Emerging World markets, it is quite common to get prepaid SIM cards on every major network, and then do the 'SIM-card-switch' between the networks depending on who to call or send a message to.

But yes, the 'Mobile Moment' is nearly upon us, as I said, that will come in 2013, when there will be as many active mobile phone subscriptions as human beings alive (this of course includes contract based 'post-paid' accounts and 'pre-paid' SIM cards, and the uses of cellular subscriptions for other non-human uses like Machine-to-Machine and the 3G cellular connectivity of our data dongles and datacards and our tablets and netbooks, all added together).

The mobile industry added about 700 million new paying mobile subscriptions/accounts/SIM cards this year. The growth in mobile alone is about three times the installed base of all tablet PCs including iPads and all its rivals, combined. The growth alone, three times the installed base of tablets. Lets not pretend the tablets PC market is anything more than a niche, a nice healthy niche for PC makers, but tablets still don't even sell as many as laptops annually... smartphones alone, ignoring all other mobile phones 'featurephones' that mostly also have full HTML web browsers, yes, just counting smartphoes alone, they outsell tablets this year by roughly speaking 10 to 1.

6.7 Billion mobile phone users (allowing for overlap). There has never ever EVER been any industry as widely spread as mobile is today - and it grew 11% this year by paying customers. This industry is viciously profitable - the most profitable company on the planet used to call itself a PC company, 'Apple Computer' but now just calls itself a 'mobile' company. The wealthiest man on the planet is no longer Bill Gates of the PC industry, it is Carlos Slim the boss of America Movil the massive mobile empire across Latin America and now expanding into Europe.

4.3B UNIQUES

So then lets dig into the numbers. 6.7 Billion is the aggregate number of mobile subscriptions, when we allow for multiple subscriptions. How many unique mobile phone users are there in the planet. The 'real' count of our market, when duplicates are removed? It is now up to 4.3 Billion unique humans. Yes, 61% of the planet's population, no mathematical cheating, six out of ten humans on the planet does have a mobile phone in their pocket, connected to a mobile network. So 2.4 Billion of all mobile phone subscriptions in use, are duplicates, second, third and even fourth or fifth accounts for those unique users. 36% of all active mobile acccounts now are redundant connections for us, above and beyond our primary mobile connection.

Or to put it in a more meaninful way, it means, mathematically that the average mobile phone user today globally, has 1.56 accounts or SIM cards. Yes, this was a mystery to our American cousins still very recently but the phenomenon that I first discovered out of Finland and has happened in every country that passes the 60% penetration level, we do see it in most countries now. More than 100 countries have passed 100% penetration level. The United States joined this club last year, Taiwan and Hong Kong passed the 100% penetration level eleven years ago, Finland, Singapore and Italy did it ten years ago. The UAE was the first country to report mobile subscriptions passing 200% and now several countries are joining that group such as Hong Kong, Panama and Macao, with Saudi Arabia just on the brink.

5.3 BILLION MOBILE HANDSETS

And somewhere between the absolute ceiling of total active subscriptions, and above the floor of unique users, lies the number of total mobile phone handsets in use. My consultancy has also provided this number since it was first measured, and reports now that for 2012 the number is .. 5.3 Billion total handsets in use globally. So 4.3 Billion unique mobile users, walk around with 5.3 Billion phones. That means, the average mobile phone user has 1.23 handsets (think iPhone user who also has a Blackberry from work). And as each of the 5.3 Billion handsets does have a connection, the excess 'SIM card only' population of 'second and third accounts' is thus 1.4 Billion or 21% of all active mobile accounts are 'only SIM cards' without a regularly associated handset (used temporarily in a handset that is more used by another network). Yes, one in five mobile phone accounts are 'purely promiscuous' customers, you can understand the mobile operators/carriers are increasingly frustrated with their loyalty programs and attempting to identify who are the loyal customers and who are promiscuous...

1.3 BILLION SMARTPHONES

So then the hot story in mobile for the past few years, our smartphone addiction. You would be forgiven for thinking every phone by now is a smartphone, yet the numbers, while showing enormous growth, indicate that only 1.3 Billion smartphones are in use today. That is 25% of all handsets in use worldwide. Yes, you read that correctly. Globally speaking, three quarters of all people who use a mobile phone, does NOT have a smartphone, not an iPhone, not a Galaxy or Blackberry or Lumia. No, three out of four humans using a mobile phone, uses a 'dumbphone' - many of which have good cameras, large color touch-screens and full HTML internet browsers, and can download Java games including Angry Birds, but are not smartphones. The smartphone population grew enormously in the past year but is only at 1.3 Billion worldwide.

1.3 BILLION CONNECT VIA 3G VS 1.1B VIA WIFI

The connectivity of our handsets and data devices is still more driven by cellular than wireless. 3G and faster cellular networks account for 1.3 Billion total global mobile connections ie 19% of all subscriptions, and WiFi is used by 1.1 Billion or 16%. As a percentage of handsets in use, 25% of all handsets now connect to 3G or faster cellular networks (note, a far higher percentage of the phones are capable of 3G connectivity, but the network operators/carriers have not all yet deployed 3G to all regions and many consumers have not upgraded to the data plans that 3G network services often require). WiFi meanwhile is used by 21% of all handsets in use globally. I might add, that the 'traffic' measured via WiFi is vastly greater than that through 3G, as most 3G plans are metered or have usage limits, but WiFi tends to be 'all you can eat' so often the heaviest usage is done in free WiFi hotspots. Don't confuse usage measurements with user measurements.

5.6 BILLION USE SMS TEXTING

And for those who were spreading words of doom and the end of SMS, we have news. Predictable news. SMS text messaging total global user base grew again last year. Up now to 5.6 Billion total users, up 11% from last year. What's with Whatsapp and iMessage and Blackberry Messenger and Facebook and Skype messengers? They all have only a fraction of the smartphone and 3G/WiFi user number, all of those have well under 1 Billion mobile users today, and are not cross-service usable. You have to join a given messaging service, and get your friends to join the same one. But SMS works on all phones. That is why the very latest measured user data from smartphone users in the USA, UK etc, tell us that the vast overwhelming majority of smartphone users with one or more of those messaging platforms - still continues to use SMS text messaging.

Make no mistake, the heaviest users of SMS have shifted most of their heavy messaging traffic away from SMS to the more efficient msssaging platforms. Several countries report a decline in total SMS traffic this year for the first time. But globally, the number of SMS users, the total number of messages sent, and the revenues earned by SMS still all grew in 2012. Yes, SMS total user base grew by 11% this year. In almost any other industry, if you grew 11% in one year you'd have a highlight year of huge bonuses. Imagine airlines or hotels or the cola drinks or shampoo or ice cream industry, they don't grow 11% per year in new users. SMS text messaging did, in 2012. Yet there are 'pundits' and 'experts' who write about the death to SMS. Haha. That may be coming. But its not here yet. Not this year and not in 2013 either...

VOICE CALLS ON MOBILE 5.4 BILLION USERS

Globally, as a percentage of all subscriptions, SMS is the most used mobile service (yes, used more than voice calls) and used by 83% of the mobile phone subscribers. Voice calls come in second, at 5.4 Billion users and 81% of all mobile users. So don't make the mistake of calling it anymore a 'mobile phone' or 'cellphone' - it is no longer primarily a 'portable telephone' - our mobile today, globally, is first and foremost a messaging device, with voice calls a highly used optional extra.. Call it a 'mobile' but not a 'mobile phone'. And yes, you read that correctly. Out of all mobile subscriptions active on the planet, for 19% there is no use for voice calls at all. Some of these are data connections to our laptops, some are 'M2M' Machine-to-Machine connections like our smart electric meters or the irrigation systems operated by SMS like used in India etc. And many more, are mobile handset users, who don't need voice, at least, not traditional cellular voice (they may well use Skype occasionally, but not traditional mobile/cellular voice). But they do use SMS text messaging and other features on the phone..

CAMERA USED BY 72%

The camera on a mobile phone is now used by 4.8 Billion people worldwide. Understand this for context - out of all people who have ever used any kind of camera in their lifetimes, for 12 out of 13 persons who ever used a camera, the only type of camera they ever used, was that on a cameraphone. Not the traditional stand-alone Canons, Nikons, Olympuses etc. Yes, for 12 out of 13 persons on the planet who ever took even one picture, the only camera they every used, was some kind of cameraphone camera. Don't tell me the cameraphone is a toy. Only one person in 13 who has taken pictures, has ever used a 'stand alone' camera either digital or film-based, and most of those will also take at least some pictures on their smartphones too... Oh, and lets look at per capita globally? Two thirds of the planet now have a cameraphone in their pockets, yes 68% penetration rate of cameraphones per capita, across the planet.

The planet has 1.6 Billion personal computers (this includes tablet PCs) - each with a screen. The world has 2 Billion television sets, each with a screen. Toss in 250 million portable gaming devices with a screen. And call it 300 million digital cameras with a screen. Thats under 4.2 Billion electronic devices that have a screen, in most cases, a color screen. And in our pockets, we have 4.8 Billion cameraphones, each with a color screen. Wow. For the planet, the mobile is 'the first screen' so to speak...

4 BILLION RECEIVED ADS IN THEIR POCKET THIS YEAR

And the world's largest advertsing platform and media is... no longer radio. It is now mobile! Yes, in 2012, 4.0 Billion people - a whole 60% of all mobile subscribers - and 56% of human beings alive - have received advertsing on their phones. How can that be if smartphones are only used 1.3 Billion and even web-browsers are used by 2.1 Billion (which has mostly overlap with those smartphones)? Its because the world's most widely used advertising format is.. SMS text messaging, of course. And number 2? Is not web banner ads, is MMS picture messaging (or more correctly, as MMS can do videos, sounds, long texts, web links and pictures, it is as the name is called, Multimedia Messaging Service). Even ringback tones have hundreds of millions of advertising audiences. So don't think that mobile ads are only with your gaming apps and banner ads and pre-roll video interruptions. Most humans who received ads on their phones this year, did so via SMS and MMS, not apps or the web banners...

MMS HAS 2.9 BILLION ACTIVE USERS

And then lets go to MMS. If you liked SMS and are a media brand or advertiser or consumer oriented company, you will love MMS. MMS can be used, yes to send pictures from one phone to another - but is a clumsy and costly and unreliable way to do that. Better ways exist especially for all who have data plans and smartphones and good mobile web services or social networking and picture sharing services. Not all mobile phone users have that, some use MMS yes, just to send a few pictures to their family and friends. Grandparents for example sending pictures of the cool Aston Martin they saw parked on the street that they know the 9 year old grandson would love to see. That is not the main market for MMS and where its growth and market is.

MMS is a multimedia platform. It is perfectly suited for news, entertainment, video, audio, pictures, long text messages, weblinks, QR codes, and yes, advertising. For delivering amazing, highly beloved, widely distributed, highly personal, relevant and timely advertising. Where good ad campaigns get routinely above 25% response rates !!! Routinely !!! Not the pathetic and hated banner ads that on mobile might yield you 4% click-through rates (and mind you, even the hated banner ads on mobile - do 10x better than their online cousins the banner ads do on the web).

MMS is the ultimate 'Engagement Marketing' platform and countless mobile ad players from Blyk to OutThereMedia to Optism to Qustodian know this and use MMS to its fullest power. If you are in media or any consumer-oriented business and are ignoring the digital interactive platform that has more active users than the global internet.. 50% more users than the total number of television sets on the planet - you do so at your own peril. Don't expect to remain employed till the end of this decade, however. 43% of all mobile phone subscribers are using MMS, globally. The 2.9 Billion total MMS user base is more astonishingly 41% of all human beings alive! MMS is the most wide-reaching multimedia platform on the planet.

2.3 BILLION CONSUME NEWS ON MOBILE

Why was it that the Associated Press Managing Editors' Conference concluded about a year ago, that the future of news is not the internet, it is mobile? And why they say that while newspapers were unable to monetize the internet, they are able to do so on mobile? Because of the numbers. The total number of mobile phone subscribers who consume news on their phones is now 34%. Or yes, 2.3 Billion people almost one in three humans alive (remember, this is all humans, counting from babies to great-grandparents) yes, 32% of all humans alive now consume news on their mobiles. Newspapers now send tomorrow's headlines today via MMS and SMS as premium services to their readers. You don't have even to be literate to get news on mobile, voice based news services are very popular in many countries, serving multiple language groups, on premium voice channels as subscription services. And yes, to put it in context these are PAID news users, 2.3 Billion on mobile. Compare to total paid subscription TV services (all formats, entertainment, movies, music, news, etc) of about 1 Billion or total newspaper circulations worlwide of only 430 million. But 2.3 Billion pay to get news on their mobiles. No wonder the Associated Press says the future of news is mobile.

So then the big internet number? The world has 2.5 Billion internet users now at the end of 2012. And look at that number - 2.1 Billion access browser-based internet content on a mobile handset! Yes, that includes the crude basic WAP browsers, that still populate very low-cost and old hand-me-down second hand phones many use in Africa and India etc. But yes, out of all internet users today, 84% access internet content at least part of the time using a mobile phone (including WAP). And 2.1 Billion mobile internet users (when WAP is included) means 31% of all mobile subscribers.

And then lets address the purists, who think we should only consider HTML 'real internet' even as most familiar browser-based internet services like Google Search, Facebook etc are available also via WAP - but yes, lets do 'real internet' on mobile. How many? 1.5 Billion ie 60% of all internet users, and 22% of all mobile subscribers. Note that this is still well above the total count of smartphones and 3G and WiFi users, because many featurephones have full HTML browsers, and especially in many Emerging World countries, even where 3G is not available, a 2.5G based cellular internet connection, at considerable cost, is far cheaper than attempting an unreliable landline based 'fixed' internet connection, at huge costs and often severe service disruptions.

To put this in another way. We know 400 million internet users do not use a mobile phone, they are 'pure' legacy PC based internet users, or down to only 16% of all internet users (remember, this was 100% of internet users only 13 years ago). There are 1.6 Billion PCs of any kind (desktops, laptops, tablets) and by today, almost all of those are connected to the web (not quite, but we can round it off now to 100%). And about 200 million more who share their access on the PC ie using an internet cafe etc. So 1.8 Billion who use the PC at least some of the time or 72%. Thus 28% of worldwide internet users ie 700 million people never use a PC at all and only use a mobile to access the internet, and a massive 84% of all internet users use a mobile at least part of the time. That tells us that 1.4 Billion people - and 56% of internet users actively use both a mobile phone (includes smartphones and basic phones including WAP) and a PC (including tablet PCs like iPad in PC definition). Yes, more than half of us internet users today use both a PC and a mobile phone to access the web. And by nearly 2 to 1 margin, the exclusive users now favor mobile-only over PC-only users.

There is a good reason so many now talk of a post-PC era and the legacy internet and the end of the mass market internet etc. The balance of users has already shifted to mobile and the game is tilting ever more in that direction.

PREMIUM SMS HAS 1.9 BILLION USERS

Do you vote for TV shows like American Idol or Eurovision Song Contest? Well, we measure that too. The various forms of premium SMS services from paying for your Coca Cola to checking into your airline with your boarding pass to paying for public transport and parking, to yes, voting on TV shows, the premium SMS market has reached 1.9 Billion paying customers. Huge. This is yes, almost twice the number of paid television subscription services, satellite, cable and digital TV systems, combined. Its 28% of all mobile subscribers and by far the most popular service type among Premium SMS is voting for TV shows. Roughly one in every 12 dollars earned by the global television industry comes from TV votes; Finland became the first country where Premium SMS revenues earned by TV outpaced advertising revenues AND subscription TV revenues. Some television franchises like Pop Idol earn in excess of half a Billion dollars in annual revenues, bonus above their usual TV advertising income, just out of premium SMS televotes. This is why I call Mobile the Magical Money-Making Machine in my books.

SEVERAL IN THE 1.2 BILLION OR SO RANGE

Then we have several more categories that are in the above 1 Billion user level. Apps are downloaded now by 1.2 Billion people (this includes Java based apps on featurephones as well as more advanced apps on smartphones). Gamers playing downloaded or networked games (ignoring pre-installed games that came with the handset) now number 1.2 Billion globally. Yes, 2.4 times more people play games on their mobile handsets than the total installed base of all stand-alone gaming consoles, tabletop and pocketable, combined.

1.3 Billion of us use search already on our mobile phones. Thats 19% of all mobile subscribers for those who are counting. Social networking like Facebook, Twitter, Linked In etc are used by 1.1 Billion people on mobile phones, both Facebook and Twitter announced this year 2012, that their half-point has been passed where now the majoirty of their users come from mobile phones, not PCs. And last but not least, ringback tones! RBTs have now 1.0 Billion global users, led by China and India obviously but highly popular in Russia, Indonesia, Turkey etc and increasingly also in more advanced Industrialized Countries of Europe and North America. In Asia-Pacific they have been the rage for some time already. How big is that? 15% of all mobile subscribers are now paying a monthly fee to have custom ringback tones via their networks and the music industry loves this subscription service as it cannot be pirated...

THATS IT. THE BIG NUMBERS ONCE AGAIN

So thats the big picture. Here to summarize the main numbers as the end of 2012 globally:

Yes, the above is all excerpted from the upcoming 2013 edition of the statistical yearbook TomiAhonen Almanac 2013. You may freely quote this blog and use any data in it and re-write any parts of this blog to better suit your readers. Just use the source as TomiAhonen Almanac 2013 and please also link to this blog, ok?

And if you don't happen to have the Almanac yet, I have a year-end special for you. Anyone who buys the 2012 edition now, gets both the 2012 edition now, and the new 2013 edition for no extra charge when that is finished in late January/early February of 2013. There is no reason to wait for the new edition. Get both for the price of one and get all of the current edition data now. The TomiAhonen Almanac 2012 is a massive 190 page volume as ebook/mbook in unrestricted pdf file, formated for your small screens of your iPhones, Galaxies and Blackberries, to have all the mobile data at your fingerprints. See more here TomiAhonen Almanac 2012.

December 07, 2012

Android Won. Windows Lost. Now what? We have passed the tipping point now, the balance has tipped and can't be flipped. The Platform of the Century will power cameras, credit cards, cellphones, computers, consoles, clocks - and collect consumer insights on our consumption..
Ok. The numbers for Q3 are in, inwhat I anticipated to be the "smartphone bloodbath" three years ago, that would last long into this new decade. That was then, when the battle was joined, and since have called and the battle of the century, the battle for the pocket, the battle for the platform to control the digital destiny of humanity.. that battle, the biggest race of all time - has been won. Already? But we barely got to know you? Yes.

Well, at one level, the platform level definitely, the winner is Google with Android.
The future of computing, the future of the internet, the future of music, of gaming, of television, of newsmedia, of banking and credit cards and even cash itself. The platform that will be in our cars, soon in our clothes and eventually embedded within humans - all that will be owned and controlled by Google, as an evolution of what we now know 'only' as the smartphone platform, Android. Wow. So this is my first blog after Google achieved its victory, to examine these thoughts, what does that mean for humanity, for business and tech, for media and marketing and advertising.

THE ENVELOPE, PLEASE

So lets do the math first. What do I mean? Yes, now the margin of victory is beyond any dispute, Google's Android is currently selling so much more, in new digital devices, than any other open or closed platform in the world, that Google is the winner. Far far more than Xbox or Wii gaming consoles. Way more than other smartphone platforms like Blackberry or the iPhone even if you toss in all iPods and iPads into the mix. Even more than all Windows based devices currently sold from desktops to laptops to smartphones to tablets. Even the proprietary Nokia featurephone platfrom, S40, has now been passed by Android in selling more per quarter. Android powers 71% of all new smartphones sold. In Q3 they sold a staggering 121 million new units or 1.3 million new devices every single day, Saturdays and Sundays included. And Android keeps growing. Android grew sales 18% - not in a year, in just one quarter!. For the Christmas Quarter, Q4, expect total Android unit sales (including tablets) to easily pass 50 million - per MONTH. That rate is almost twice what all traditional PCs, desktops and laptops - the domain of Microsoft's past glory, Windows - manages to sell, and Windows does not power all PCs anymore, not even close.

The smartphone wars are the most heavily contested global industry of all time. More global giant Fortune 500 sized companies are in this race than in any other industry, ever. The world's largest consumer electronics company, Sony is in the game. The world's biggest basic cellphone maker, Nokia is in of course. The world's biggest technology company, Samsung is in. The largest computer manufacturer by one count, Lenovo, is in the race as a new entrant. And the world's largest computer manufacturer by the other count, Hewlett Packard was one of the pioneers of smartphones. The world's most profitable company got that way, by selling a smartphone we know and love as the iPhone. Just two short decades ago Apple the then-PC maker was on the brink of bankruptcy. The biggest mobile phone operator/carrier group, Vodafone sells some of its own-branded smartphones in some markets too. The world's largest software company, Microsoft is in the race on the software side, and is approaching the race on the hardware side too, already making its own tablet PC and is rumored to soon launch its own smartphone too. Almost any major tech or consumer electronics brand you can think of is in the smartphone races from Panasonic to Sharp, from Alcatel to LG, from Dell to Fujitsu, from Acer to Toshiba.

And then look at Android. Of the Top 10 largest smartphone manufacturers of the world, Android powers number 9. It powers number 8. And it powers number 6. And number 5, number 4, number 3 and number 1. Of the Top 10 biggest smartphone maker in the world, only three manufacturers do not supply Android based smartphones, and none of those other three use each others' operating systems either. This is sheer dominance. This is like Gulliver and the Lilliputs. Android is the only giant around with the tiny people.

NEXT MILESTONES

The Android world is so new, that their installed base is still 'modest' by mobile phone standards, altough they are already by far the biggest smartphone platform by installed base. At the end of Q3 there are 559 million Android powered smartphones in use, plus several dozen million more in tablets. In round terms, lets call it 600 million Android devices of any kind, in use. That is nearly twice what Apple has in the iOS ecosystem of iPhones, iPads and iPod Touch devices. It is about three times more than Nokia's shrinking Symbian ecosystem and five times bigger than RIM's Blackberry ecosystem of its smartphones and tablets.

But looking at the next milestones now in December 2012, in passing the next digital platform rivals, Android has still a way to go. The next rival is Microsoft's 1.25 Billion Windows devices in use, across personal computers, servers, tablets and smartphones. So yes, Android devices already sell twice the level of all Windows based devices, but Microsoft's installed base was built over three decades, Android has been arnoud barely more than one fifth that. So Android is selling more than Windows - and the gap is growing not shrinking - so when will Android pass Windows in installed base?

But that moment is coming sooner than you might believe. When will Google's Android power more digital devices in use than all Microsoft Windows gadgets, combined? This time next year! When the data comes in for Q3, 2013, Android will have a larger total ecosystem of devices in use powered by that operating system, than all Windows devices globally in use. Yes, this includes best case for Windows 8 and Windows Phone 8. We have seen the emperor fall. Watch this moment, it is rare for us to witness such a giant fall as what used to be Microsoft in the tech space. Its fall has started, it is now accelerating, and the CEO in charge, Steve Ballmer, is clearly struggling to keep his faculties and is acting ever more erratically, trying to keep the pieces together.

Then. Just one quarter later, by the end of next year, 2013, there will be more simply Android-powered smartphones alone, forget the tablets and other devices, than all Microsoft powered Windows based devices in use, across all Windows versions. Wow. That is fast. No wonder Microsoft is panicking about how their smartphone strategy imploded with Nokia. Yes, the era of Microsoft powering most computing devices is ending - next year. Some of us thought we'd never live to see that day haha.. Windows will be relegated to only being a desktop based obsolescent computing platform, eventually thought of in a similar way as we might think of Cobol, Fortran and Pascal on mainframe computers today. (hey, don't laugh, I learned to program that way in 1983!)

MOST WIDELY USED TECHNOLOGY BRAND OF PLANET

Then by the first quarter of 2014 - only 16 months from now - Google's last historic rival will be overcome, the peak of human adoption of any one digital technology brand - Nokia's peak global adoption level when it was in the pockets of 20% of the planet about a year ago. Yes, by Q1 of 2014 Google will be used by more than one in five humans and their global device installed base will be past 1.5 Billion globally.

And that won't be the end, by this time year 2014, Google's Android will power literally half of all mobile phone handsets sold - when about two out of every three new handsets sold will be a smartphone, and most of those will be Androids. And then by Q4 of 2014, Android will reach another incredible milestone, it will be (mathematically) in the pockets of one out of every four humans alive. Yes, Android's market share of humankind will be 26% by Q4 of 2014. That is a mathematical calculated average, in reality, many of us will have several Android gadgets like two smartphones and a tablet, and thus the real reach of Android won't be one quarter of humanity, but it will be unprecedented nonetheless and enormous.

Android will breach the rarefied Billion user club in just six months from today, by June of 2013. A Billion users? Only a handful of brands have ever reached that lofty level. Facebook, Skype, Windows, Nokia, Coca Cola, Visa and Mastercard. And by 2015 Android will join the truly exclusive club of 2 Billion users, doubling that club's size from 1 to 2, joining Visa, which just this year hit the 2 Billion active Visa credit card level. It took the Visa brand 32 years to hit 2 Billion cards in use. Google will achieve that level with Android in 7 years from launch in 2008. And the frightening part? Google will breach the 3 Billion user level in only .. one further year! Yes by the end of 2016 Android will be in the exclusive altitude of 3 Billion concurrent active devices in use of the technology and the Google brand.

No wonder Visa is already saying the future of payments is mobile money, on mobile phones. They saw this scenario developing. And did Google anticipate it? Google wrote in Harvard Business Review last year that their number two priority is.. mobile money. You know those famous Visa TV ads 'they don't take American Express' - that day may come soon, when Google runs its ads as 'they don't take Visa'. Don't laugh, 40% of the total Kenyan economy already goes through mobile phone payments. Turkey was the first country to set a date for when they end the manufacturing of coins and banknotes - 2025 - to be replaced by mobile money. Coins were invented in the region we think of as Turkey today, 2,600 years ago. Yes, you and I will live to see the end of cash being manufactured as a monetary instrument (no doubt, some commemorative coins will still be made, for collectors). In Norway and Estonia you can submit your whole tax return by SMS text message and Estonia has already run national elections where the citizens were allowed to vote via their mobile phones.

Your mobile phone number is the nearest thing to a global identity number, it is truly unique, where social security numbers and passport numbers are at best, unique to a given country. Very soon your driver's licence, passport and other identity will be on your smartphone.

CENTER OF CONVERGENCE

I've been writing about digital convergence in all of my 12 books. I've gradually expanded the reach of industries which will find most if not all of the given industry migrating to digital, and that the smartphone is at the epicenter of that convergence. We see it today, from our cameras to our wristwatches and alarm clocks to our web browsers, music players, gaming (Angry Birds, anyone?). The mobile is becoming the primary newsmedia channel, the primary entertainment platform and increasingly even retail, commerce, travel, banking, insurance etc are going onto our pockets, or derive a major part of their consumer interaction through our smartphone.

What does it mean, when Carrefour the giant French retailer now drives its retail consumers to the correct aisles in its stores, based on the smartphone app that is the shopping guide? What does it mean, when Finnair counts how many empty seats it has on a given flight, and then sends upgrade offers to its frequent fliers - as they are processed through security onto the airport? What does it mean to Clarion Hotels chain when they already offer for example in Sweden the chance for travellers to use their phone as the key to the hotel room? No plastic hotel keys needed anymore. And what does it mean to Visa in South Korea, when they automatically enable your brand new Visa credit to your phone, but they then ask 'do you want a free plastic Visa card mailed to your home address?' Why would they ask that? Because in South Korea today, nobody uses the old plastic credit cards anymore, every merchant who takes credit cards, has mobile payments already enabled.

Google through Android will be involved in all of our digital activities, in all our lives, as obviously central to it, as Windows had been on our PCs for the past two decades. No matter what else you did, that Windows basic set of tools and apps - remember the annoying paperclip-guy who was Microsoft's virtual 'Help' guy at one point? If you can imagine that world, but expanded ten-fold, no, hundred-fold, in the digital future of this decade, replace Windows in that metaphor with Android, and you see Google will be literally in every one of our lives, and in all our digital activities.

And Google isn't standing still on this. Not like Microsoft, which tended to follow, let others build a future, and then try to bully its way into it - winning some (WordPerfect? Lotus 1-2-3? Novell Netware) but losing others (Chrome and Firefox. Google search. iTunes). Google instead is taking a leading position. Like look at its bold way of pursuing Google Glass and Google Goggles, the Augmented Reality (AR) future for digital. What I now am calling the 8th Mass Media (following Mobile which was the 7th obviously). Google has won the battle for the 6th mass media (internet). It has just now been declared the winner of the 7th mass media (mobile) and Google is trailblazing its way to own also the 8th mass media, which only has a couple of million pioneering media customers in some of the most advanced markets today, like Japan, South Korea, Netherlands and Sweden. But Google is there already.

THE TRUTH IS IN OUR POCKET

We look at our mobile phone 150 times per day, said T-Mobile USA earlier this year. For smartphone users its already 200 times per day according to UK measurements reported in the Guardian. Like I have been saying for years now, its the first thing we see when we wake up, and the last thing we look at before we fall asleep. Yes, most of us sleep with the phone in bed with us and use it as our alarm clock. The mobile phone is our memory bank, it is our calendar, our address book, our messaging center. A study by Vodafone of its New Zealand customers found that more than a third of New Zealanders had resolved a bet or argument by going to their pocket, by searching the answer via the mobile internet. It is the ultimate truth machine. The truth is in our pocket! And who sits at ground zero of that search? Google of course.

Android will power most cameras. Not all, but by far the biggest part of all cameras in use (as cameraphones, obviously). Android will power most videocameras used by consumers. Android will power most 'watches' and clocks and alarm clocks in use (again, only through the clock face on our smartphone screen). Android will power most web browers and 'computers' used by consumers. Not all, there will be an ever diminshing - but not vanishing - segment of 'professional' computers with keyboards and mouse inputs and full peripherals that professionals use. But consumers will use tablets and smartphones, and while Apple will have a nice healthy slice of that business, and some rivals may hold other pieces, Android will dominate that. Android will power our calendars, our music players, our video players, our gaming consoles, and so forth. Soon Google launches its first Google Goggles, the eyeware with the inbuilt cameras and tiny projection screens viewable by the person wearing the glasses. All that - powered by Android, of course. Think of it as a specialized smartphone form factor, built in the shape of eyeglasses. There already exist wristwatches that are in effect smartphones (not very popular by the way). The smart technology is invading our clothing too.

THE POWER OF THE DATA

We just saw the US election, how the Democratic party used the power of deep voter data and insights to run circles around the Republicans, winning the Presidency, winning several 'hopeless' Senate seats, and even taking several seats in the Congress. A victory 'sweep'. And powered by superior insights of consumer ie voter data. It was as I wrote, Orca vs Narwhal.

What of Amazon? Amazon knows that I love my James Bond and I am into mobile telecoms and Formula 1 racing, based on what I buy. Imagine how much more powerful Amazon's search engine - and its recommendation engine - would be, if Amazon also knew which retail shop I go to, what airline I fly, what credit card(s) I use and what hotel I am staying in right now? Have a guess who knows - or will know soon. The company whose operating system powers the gadget in my pocket. Google will know soon, through Android, just about everything one could ever hope to find out, about anyone.

Alan Moore coined the phrase that social media intelligence is the new black gold of the 21st century. Just like how the Klondike and gold miners were (sometimes) able to strike it rich by disovering gold (or silver). That was mostly in the 19th century. Then in the 20th century, the 'black gold' was that liquid gold they started to discover in Pennsylvania and Texas and Saudi Arabia. Oil. Today most of the biggest companies on the Fortune 500 are oil companies (or companies that build devices that run on oil - cars). Now, Alan argues, for this new 21st century the 'new black gold' is that data we extract from our phones and other digital devices about consumer behavior - and its most lucrative part is the 'social media' part of the insights.

COMMUNITIES DOMINATE..

The recommendations! What do we talk about and with whom - haha, not unlike how the Obama campaign used SMS text messaging on election day, asking registered Obama supporters, would they be willing to make one call to another Obama supporter who had not voted yet, to encourage them to go vote for Obama. And how the Obama campaign used Facebook apps to have Obama Facebook friends spread the Obama message to likely Obama supporters - 600,000 Obama voters did that, the average reach was 8 people, so Obama's reach in Facebook expanded by 5 million beyond what Obama had achieved up to that point. Of those 5 million, 1.1 million turned out to register to vote for Obama.

There was no way through television or robocalls or home mailers or emails or even Twitter and Facebook friends, for Obama to find those 1.1 million new voters. They were found by Obama's friends on Facebook, doing the targeted marketing for Team Obama, to find new supporters. This is what Alan wrote about with social media intelligence - the new black gold. Not just to make us rich - also to help us win our elections or help in whatever causes you have from education to healing the planet.

What power does this give Google? I don't mean anything creepy in spying into what we do. I suggest you read Tony Fish's book My Digital Footprint and follow his guidelines very closely. Certainly yes, that power will also be there to spy on consumers - but just think about Amazon. We often go to Amazon just to search something - to see what else Amazon recommends. We are quite literally accessing Amazon 'just to see ads'. To see Amazon recommendations. And how often have you done this? When Amazon recommends a book or DVD for you, and asks 'would you like to see more recommendations' you click on 'yes'. Of course we do! We love Amazon advertising so much - we do literally ask for more ads.

Its the magic that Blyk was able to exploit in its telecoms and media models that we see from Alcatel-Lucent's Optism system to OutThere Media. It is seen in innovative companies now, like Qustodian are doing in Spain and the UK. Making advertising so targeted, personal, useful and beloved - that we do literally ask for more ads! And then imagine all that insight and all that power, and multiply it by infinity (ok, not infinity but as close to it that it won't matter). When Google decides to take full advantage of Android - and Google's other assets from search to YouTube to what will soon be known as something like Google Money - it will make Amazon's recommendation engine seem as advanced as reading the Yellow Pages. If you hate the very idea of seeing ads on your phone and think this future scenario is unbearable, I urge you to read Kim Dushinksi's brilliant Mobile Marketing Handbook (2nd edition) and her Ten Commandments of Mobile Marketing. If companies follow those rules, the advertising on mobile will not be creepy or annoying or interruptive. They will be beloved.

We already rely on Google search to find us anything! That search is only becoming faster and more relevant and more personal and more urgent on mobile, as Peggy Anne Salz has been reporting at M Search Groove and in her books. And we are learning to do that instantly, through our smartphone, rather than waiting to get home to our PC. Now imagine if we program some clever logic into it - imagine Siri a few generations later, when it also handles our money, knows what is on our calendar, knows what we like to do, etc. It will start to make suggestions to us, and again, not in a creepy way of spying on us, but in ways just like Amazon does with our book and DVD purchases. It will for example tell us, that since we usually take the train home at 5 PM, now is the time to go if you want to make it to the train, or the next train is at 5:20, or are you intending to work late and should I order a taxi for 7 so you can make it home in time to watch the live game on TV tonight?

That would seem like the perfect secretary, the perfect assistant, the perfect butler and perfect consierge, all rolled into one. Incidentially, that is what the worlds's most advanced mobile operator/carrier, in the most advanced mobile market, Japan, NTT DoCoMo has found, when it evolved its mobile wallet, Osaifu Keitai, into its latest iteration, called iConsierge. Consumers say its the best service they have ever experienced, and it feels like the mobile phone is reading their minds. They cannot imagine life without it.

Like with most tech, the early iterations will be 'proprietary' models, so we'll find a mobile wallet by a carrier/operator like NTT DoCoMo or another by a handset maker like Nokia Money was in India, or a third by a digital money player like Paypal or a fourth by a traditional bank or a fifth by a credit card company etc. But then the platforms win out and if Google is already working on Google Money and Android sits in the pockets of one out ten humans by the end of this year, one out of six humans by this time next year and one out of four by the end of 2014, of course they will become one of the biggest money platforms - if not the biggest. And then - imagine how much more powerful would Amazon be, if 'Amazon Dollars' were also used at Ebay and Ikea and McDonalds... But soon Google will handle our payments and who knows, we migth see G-dollars some day too, no doubt instantly convertible across all real currencies and also most virtual currencies, much how Google Translate helped us instantly understand any written language today.

ADVOCURRENCY

Google started off doing search better than anyone else without worrying exactly how to 'monetize' it. They eventually discovered a highly lucrative commercial model, by providing advertisements alongside search, and the sponsored search. With that, they became the biggest advertising platform on the newest media - and one which today is bigger than cinema, recordings and radio. Soon internet advertising will be bigger than print and eventually it will be bigger than TV ads. And Google utterly dominates this massive media opportunity. Google's roots are in search and its data, and monetizing through advertising.

Whatever Google may do with Android and maps and videos and money, you can be sure its Google, it will include understanding data, search, consumer user data, and advertising. Which brings me to Jonathan JMac MacDonald's concept of Advocurrency. Jonathan argued that when advertising and money (currency) merge through mobile, there will be a bonus benefit from 'advocacy' hence Adv(ertising) plus (adv) o (cacy) plus currency equals Advocurrency. A kind of evolution of advertising that includes some form of money - not unlike coupons were advertising and money in the past - but which now incorporates social media insights. Is my Twitter recommendation with 11,000 followers the same as someone else's who has 100 followers? And even more, Jonathan argues, that we can influence and manage that value - if I recommend Pepsi this week, then if I try to recommend Coca Cola next week and Red Bull the week thereafter, the value of my recommendation diminishes, regardless of how many followers I have. But if I rarely make recommendations, the value potentially increases, etc.

Now think of it from the side of money. We already have some rudimentary advertising on our currency - usually either ruler worship - the picture of the Queen on the British Pound for exampe - or celebrating history - the pictures of dead presidents on US dollars. Some countries have taken the opportunity to use their currencies as a kind of tourism and travel advertising, showcasing their landmarks and national treasures. Of course the Europeans were so inept at this kind of thinking, they couldn't agree on what European landmarks to use on the Euro banknotes, and decided to create bogus images that are 'representative' of European landmarks without representing anything specifically. How silly is that? Why on earth not use the Eiffel Tower and the Parthenon and the Brandenburg Gate and the Little Mermaid? But I digress. Yes, money has had some advertising for centuries. Now we have the new digital era, when money can have much more.

Digital coupons, digital money, digital recommendations. Group buying. Gamifying our money like becoming the mayor of Starbucks. These all are steps on the road to advocurrency. There are early signs of actual commerce conducted on recommendations as 'currency' and for example Kellogg's opened its first shop in London that lets you have free snacks paid for by sending Tweets via Twitter. That is clearly an early manifestation of advocurrency.

ANDROID OWNS THE FUTURE

Now, think about this. If the future of the internet is indeed mobile. And the future of money is mobile. And the future of advertising will increasingly be on mobile. And the future of social media is, as all major social media brands from Facebook to Twitter already say - on mobile. And mobile enables 'advocurrency' then we will soon see this as a real viable commercial revolution. Then, I can go to Pizza Hut, order a pizza, and pay for it with real dollars, or by having Audi sponsor my meal - through me agreeing to see four Audi ads - not now, but Audi trusts me, and says I need to watch them over the next two weeks - or I can pay for my pizza with my reputation, by doing two Tweets about that Pizza Hut. This will soon be the reality of commerce, in a world of advocurrency.

And someone has to act as the fair arbitrator, on what is the correct 'exchange rate' of one dollar vs one Audi ad to Tomi Ahonen vs one Tomi Ahonen Tweet about Pizza Hut today..That could theoretially be Citibank, banks are good at those exchange rates for example between different currencies. But do you think banks will ever really 'get it' about advocurrency, before its too late? Incidentially, if you can deposit real cash to a bank, and they will pay you interest on it - and then they will lend your money to someone who needs to borrow it, and charge that person interest - will this not also be true of Advocurrency at some point, in some way?

Someone like Visa is more likely to 'get it' but I would rather bet on someone truly gifted at disrupting everyone else's business, like say .. Apple .. or Google. Did I mention, that Google thinks its number 2 global strategic priority is mobile money? And that Android is now the world's most sold digital platform?

Today when we think of the biggest computer platform, that is Windows. If we think of the widest reaching internet advertiser or brand, that is Google. If we think of the bestselling consumer technology, that is now Samsung (was Nokia still at the start of this year). If we think of the biggest credit card, thats Visa. In the near future Google's Android will be far more relevant globally, than any of these. By the end of next year, Google's Android will power half of all new mobile phone handsets sold - not just the smartphone 'segment' but half of all new handsets sold.

MICROSOFT (BALLMER) THREW IT AWAY

This future belonged to Microsoft. Its Windows platform ruled the desktop and the laptops, the previous era of computing. Microsoft's Bill Gates did see and correctly anticipate the smartphone revolution, partly observing Nokia and Hewlett Packard build it - and Microsoft rushed to join this race a decade ago. They were doing ok, captured one eighth of the market and were clearly the second largest smartphone OS behind Nokia's Symbian

(Hey, hold on. Wanna see irony? Today latest Q3 data and 20 months after Nokia CEO annoucned the premature death of Symbian, in Q3 Symbian sales has collapsed from the 29% market share it had when Elop announced it, to 2% now. Latest data Q3. When Elop announced in February 2011 he would replace Symbian with Windows, Symbian was stil the world's bestselling smartphone OS platform, obviously bigger than Windows. And what did Elop select to replace Symbian? Windows Phone. And still today, after Symbian has shred nearly 11 out of every 12 customers it had, and Symbian is at 2% global market share by latest numbers - Windows Phone market share lags that of Symbian!!!!!!! Elop replaced 'the first ecosystem' with the 'sixth ecosystem' promising the world it would become the 'third ecosystem' haha).

Back to the battle of the century. Bill Gates saw it coming and prepared Microsoft for this next transition to smartphones, yes. But it was his successor, Steve Ballmer who blasted that future away, not just continuing Microsoft's history of bullying its 'partners' and suffocating their business, but by killing migration paths, from Windows Mobile to Windows Phone 6. How did that go, Ballmer? Crashing market share from 12% globally to 4% (both Windows Mobile and Windows Phone combined, peak market share). Smart move, Sherlock.

Then to verify, Ballmer had truly learned his lesson of the wrong way to shift from one platform to the next, with its new partner Nokia having just spent its biggest launch budget ever - three times more than any phone launch of any company in history, globally pushing brand new award-winning Nokia Lumia smartphones on the latest Windows Phone 6.5 OS, what did Ballmer do next, to really screw Nokia, the 'strategic partner'? It announced no migration path to Windows Phone 8. All of Nokia Lumia was instantly Osborned. The Windows total smartphone market share (Windows Phone and what remains of Windows Mobile) was 1.9% in the latest quarter. This is how you destroy a market-dominant position. Textbook. Microsoft had it all, it had all the biggest partners in the game from Hewlett-Packard and Lenovo on PCs (and would have been tablets too) and Nokia and Samsung in smartphones. And Ballmer massacred that by his moronic mismanagement of Microsoft's massive market.

Will Microsoft be a player in the ever-diminshing desktop? For sure. Will it manage to hold on to much of the non-growing laptop market,. probably. Will it become the biggest in tablets, no way. The Surface and Windows 8 tablets will go the way of the Zune. Will Microsoft be able to take third place in smartphones. No way. At some point Ballmer will finally look at the endless money pit that is Windows Phone, and pull the plug like he did with the short-lived Microsoff handset, the Kin. The carriers hate Microsoft Windows Phone, not because it has Skype pre-installed and fully integrated with Microsoft's 1.25 Billion PC world - they don't like that either - but because Skype was a tiny irritant of big damage before Microsoft bought it. Today Skype cannot be killed because Microsoft owns and bankrolls the existential threat to mobile operator/carrier business. Not my words, Nokia's CEO Stephen Elop told Nokia shareholders that carriers don't like Skype 'of course' and many are refusing any sales of Windows Phone handsets because Microsoft owns Skype. Not my words, that is Windows partner Nokia talking to Nokia shareholders via its ex-Microsoft CEO. So for any carrier to support Windows Phone is like deliberately and knowingly drinking poison.

There is no confusion in this matter. Carriers will never, ever, allow Microsoft's Windows Phone to become a significant player in mobile. Never. Ever, ever. Microsoft and Nokia can bribe their ways into a tiny share. They may get 2%, 3% if lucky, even 4% market share. That would be one THIRD better performance than Microsoft the world's largest software maker and Nokia the world's largest handset maker at the time, managed to achieve at the peak of Lumia success, added to by the best that Samsung, HTC and others could do with Windows Phone this year. The peak performance. And I am allowing 33% better performance. And if you have 4% of the global market for smartphones, you are a tiny meaningless shit. Sorry, didn't mean to say that. A tiny meaningless 'niche', you are not 'the third ecosystem' by any stretch of that definition. Sorry, Ballmer, Gates was the brilliant guy who saw this coming. You are the putz who threw the future all away. Gates at least understood that to migrate customers from one platform to another, you build a migration path, as Microsoft did from DOS to Windows nearly 3 decades ago.

And Windows 8 and Windows Phone 8 will not matter one iota in this. The battle for the PC was WON by Microsoft. They now are desperately trying to extend that leadership position to tablets, to truly dismal success, so bad, that Microsoft had to resort to its own Surface tablet. And then a FAR FAR bigger market is the smartphone, where Microsoft was once the second biggest, today they are at 1.9% and falling. Can Windows Phone 8 help Microsoft grow to 2% or even 3%, maybe. That is MEANINGLESS when your software once ruled on 90% of the digital platforms sold on the planet. Windows 8 will help Microsoft extend the PC side of Windows further, it will never become an acceptable platform for smartphones. Mark my words. Never. It will NEVER reach 10% market share in smartphones. NEVER.

Did you notice IDC just announced their latest forecast for Windows Phone to be 11%. Their previous promised 19%. So a massive cut in the IDC forecast in just a six month period - and IDC didn't even bother to tell us why the sudden drop. And what of others. There are many analysts who now say Microsoft and Nokia can only do 3% or even 2% for Windows Phone in 2013. That - my dear readers - is finally in line with my projections haha...

NOKIA (ELOP) THREW IT AWAY

Nokia saw this massive future coming too. Nokia invented the smartphone (with HP) and Nokia dominated the smartphone market utterly. Nokia was the first to claim smartphones as true pocket computers long before Apple's iPhone made that a more widely accepted view. Nokia invented the consumer smartphone and the gaming smartphone, in addition to inventing the corporate/business smartphone years before anyone had seen a Blackberry. Nokia saw the future of advertising on mobile as well as the future of money on mobile - and had major investments on both. Nokia had one of the world's first smartphone app stores for its N-Gage gaming phone and by the time the world was celebrating the iPhone's App Store, Nokia's Ovi quietly grew to become the world's second biggest app store - and the bestselling app store on four of the six inhabited continents including the three with the biggest populations.

Nokia owned the future to smartphones on every front from the hardware to the operating system to the ecosystem, the services and the support systems. Nokia had for example Nokia Money in India, with 12% market share of the rapidly growing mobile money market of the second most populous country - and one where regular banking is not widely used. When Elop announced his new strategy, Nokia dominated the smartphone market more than Toyota or GM has EVER dominated the car market! Nokia was twice as big as Apple in smartphones, four times as big as Samsung when Stephen Elop took over as CEO. Nokia grew MORE than Apple in 2010, so the gap was increasing. Nokia grew unit sale by a world record amount that year, growing revenues, and setting a Nokia record for growing profitability in the firt Quarter Elop was fully in charge. That, my friends, is the definition of utter global world dominance.

The world's most used tech brand was (and still is today) Nokia. Nokia's Symbian powered not just Nokia smarpthones but those of several other manufacturers especially in Japan where the most advanced phones are made. When the big telecoms analyst houses issued their forecasts for smartphone markets in late 2010, into years 2011 and 2012 - they ALL agreed, ALL agreed, (by 'all' I mean EVERY SINGLE ANALYST WHO PUBLISHED A SMARTPHONE FORECAST FOR NOKIA INTO 2012 or beyond. ALL AGREED) that Nokia would continue easily as the biggest smartphone maker till now. Where is Nokia?
Stephen Elop came in as CEO, looked at a growing smartphone market, a growing Nokia smartphone sales unit, growing revenues, growing profits and an industry-leading migration rate from dumbphones to smartphones - yes, in 2010 Nokia's migration rate from dumbphones to smartphones was ahead of the industry average - and decided that was not good enough. And he decided to abandon all that, issue his Elop Effect edicts and destroy Nokia in the process.

Today? Nokia has fallen to 10th biggest smartphone maker by Q3 and may fall out of the Top 10 by now, Christmas Quarter ie Q4. Nokia market share in smartphones was 29% when Elop annoucned his mad Microsoft strategy. In Q3 even as we add what remains of Symbian share, Nokia's global market share had fallen in smartphones to 3.7%. It may be at 3% now in Q4. Elop has destroyed the market for 9 out of every 10 customers Nokia had owned in the smartphone space, in a period of six quarters. This is the world record in destruction of any global market leader, and the only reason Ballmer is not the worst villain in this story, is that his buddy Elop did an even worse job over at Nokia. Stephen Elop is the worst CEO of all time, caused the fastest collapse of a market leader among Global 500 sized companies ever, in any industry! He has set the world record for mismanaging a company. Why is the Microsoft Muppet allowed to remain as CEO, I can not understand. And any investigative journalists out there, please consider this story - it is a Pulitzer Prize in the waiting, the story of how Nokia owned the future and the new CEO willfully threw it all away.

If Elop had let Nokia be. If he had let the three MeeGo devices be sold last year, and allowed Symbian to shift and die slowly as it was intended, over several years, shifting to ever lower-cost devices (for Africa, India and the rest of the Emerging World where the big growth in smartphone market is going to be, and where Symbian was holding between 70% and 90% market share) as MeeGo took the top end, Nokia would now sit on - according to EVERY published analyst in the world - on the world's largest share in smartphones, ahead of Samsung, Apple, Blackberry, HTC etc. If we say conservatively that it would be 25%, Nokia would be selling 180 million smartphones now, at revenues of 36 Billion dollars from his smartphone unit alone and adding at least 4 Billion dollars more to Nokia profits. That is not 'my view' - that was the CONSENSUS view of industry analysts just before Elop annoucned his mad Microsoftian misadventure. Now Nokia sells maybe 5 million smartphones this quarter and last quarter, it made a loss of 49% PER SMARTPHONE !!!

So Nokia gets big press for its Augmented Reality 'city lens' on the latest Lumia. Sounds nice, until you go back nearly four years of Google's Android and look at Layar, the worlds' first Augmented Reality browser, which yes, did just that same city lens type of AR solution - on Google Android smartphones - more than three YEARS ago. Like we used to say jokingly, to see what is coming to the next iPhone, look no further than the Nokia smartphone of 3 years ago, now we apparently also know, what Elop will bring to the Lumias. Look at Android smartphones from three years ago.

BTW if you doubt MeeGo, keep an eye on Jolla and Samsung's Tizen in 2013. That is what Nokia 'owned' and Elop threw away.
So Nokia could have shared this future with Google, as a fair fight, side-by-side. With Android now the biggest OS with maybe half of the world, with MeeGo/Symbian/Meltemi the second ecosystem and Apple's iOS the third. These three would have controlled nearly 90% of the worlds' smartphones. Stephen Elop sat on the guaranteed rocketship ride to being one of the winners of this decade. He threw that away for Nokia. Now instead, Nokia is on the brink of oblivion.

SAMMY SAMMY SAMMY

And we cannot write about Android without mentioning the biggest hardware contributor to Android's astonishingly fast rise to the top. Early Android bestselling smartphones were made by HTC but then along came Sammy. Samsung today has sold nearly half of all Android devices in use worldwide. The biggest thank-you from the Googleplex needs to go to Seoul to Samsung's HQ. But observe what is happening quietly in the battle for the pocket. Samsung launched its own OS even as it made our highly praised Galaxy series Android devices. The first OS was called bada (which still haha, outsells Windows Phone, talk about adding insult to injury, Samsung is also a Windows Phone manufacturer). And when Nokia bailed out of its partnership with Intel, to develop MeeGo into the next smartphone platform, who stepped in? Samsung of course. They refocused and realigned the partnership, its now the Tizen alliance but yes, Samsung and Intel are the core hardware partners.

This is a bit like IBM vs Microsoft in the 1980s if you are old enough to remember. When Apple introduced the Macintosh, Microsoft would develop its Windows OS as the 'Macintosh envy' that Microsoft had. But IBM had differing views of where the PC market needed to go, plus it wanted to break away from its PC dependency on Microsoft (sound familiar, haha) and thus it built its own 'next generation' operating system for PCs, called OS/2. That ran alongside early Windows and later editions of DOS for quite a many years back then. So in a way, Samsung with bada and Tizen today are a bit like IBM was in the 1980s, taking on Microsoft, except that with Samsung, obviously the primary target is not the miniscule Microsoft Windows Phone in smartphones, its Google's Android. So yes, Samsung, the biggest Android handset maker, is preparing to launch a new smartphone operating system for 2013, called Tizen, to go directly against Google's Android. And fair's fair - Google itself bought Motorola and sells Motorola branded smartphone hardware, running Android, against Samsung's Galaxies. Whats good for the goose, is good for the gander.. The lesson that Samsung seems to have learned very well from the IBM OS/2 fiasco is, that Samsung have hardware partners like Intel, they have committed handset manufacturers and they have most importantly - the carrier support already locked up, with major global carriers supporting Tizen from NTT DoCoMo to SK Telecom to Telefonica to Sprint.

Anyway, Samsung is very good at the hardware from handsets to the big plasma screen TVs to many of the components going into iPhones etc.. They are not as well known for the software and services side, but have competences there as well - many hidden as only on services and apps launched in South Korea to it highly evolved dometistic digital market - and have been expanding that competence now globally with the bada ecosystem, which will likely be merged into the Tizen project in the coming months and years. So in some way, when you look at Samsung smartphones, and especially its Tizen part in the next few years, remember you could remove the Samsung logo and were it not for Elop, that would have been (should have been) a Nokia brand there..

As to Android and the iPhone, Tizen is the real Third Ecosystem. Just with Samsung's own smartphone global dominance, if they shift 20% of their total smartphone production by the end of next year to Tizen, Tizen will automatically be the third ecosystem. That is, before ANY of the many hardware vendors have added their handsets to the Tizen mix. I do expect over time Tizen will grow to pass the iPhone iOS to become the second biggest but Android is so far ahead and well entrenched, I don't see Android being toppled, not during this decade at least.

But if you grew up thinking the tech world was governed by the 'Wintel' alliance of Windows and Intel - the new tech standard is Samgle, or Samsoogle, Samsung and Google (or Googsung). The biggest tech company of the planet (Samsung) and the biggest internet company and biggest advertising company, that owns the biggest-selling software platform (Google). And the biggest loser pairing is Nokisoft, that is ever shrinking to be the Microkia.

ANDROID RULES

So yes, if you're in advertising you love your Macs, iPads and the iPhone. Of course you believe the Apple cool-aid that the future belongs to the iOS. And you prepare your award-winning iPhone apps and show them on your iGadgets to your friends and colleagues.

But for all others in the tech industry, the digital world now starts with - and often even ends at - Android. Get your competence there. If you do apps, make sure you do Android apps. If you do advertising, check out Google advertising services. If you do search, you know what I mean... Google is now the new epicenter of the digital convergence space. Windows is dead (Nokia also is dead). The King is dead, Long Live the King. Android is the new King of Digital. Congratulations Google. You said the future of the internet was mobile, and only by being able to successfully transition into that future, can you remain relevant into this new decade. You did it. Android is the winner now, unstoppable.

50 million new Android devices sold per month, today. Wow.

ONE PLUG

What is your strategy in mobile? How will Android play in that strategy? Are you going to be partnering with Google on that path, or competing against it? How can you capitalize on the biggest economic opportunity in our lifetimes? Did you notice that the most profitable company - and the most valuable company - on the planet, is a former 'computer' company which now calls itself a 'mobile' company? Apple. And the wealthiest man on the planet no longer comes from the computer industry, Bill Gates has been supplanted on the top by Carlos Slim, a mobile industry tycoon. This is your life and your career whether you wanted it or not. And if Google's Android will shortly be in one out of every four pockets on the planet, you will not be able to avoid Android on your career path.

So what does that future look like? What is the digital landscape in 2014 or 2015? Check out the TomiAhonen Mobile Forecat 2012-2015 to see the future through the eyes of the most accurate forecaster in the mobile industry.

November 30, 2012

I am getting bored with the story of Nokia, the dead
smartphone maker. Yes, Nokia has now become the Dell of handsets, ironically,
as Nokia was the world's biggest smartphone maker when new CEO Stephen Elop
took over (and more than twice the size of its nearest rival, vastly profitable
in smartphones, growing smartphone sales, revenues, average prices, and
profits. Not just that. Nokia grew more in that year 2010, than Apple, so Nokia
was pulling away from its rivals, the gap was not closing, it was expanding.)

So yes, its like I said in February of 2011, when this mad
Eloppian strategy was announced to switch to Microsoft's Windows Phone
operating system for Nokia smartphones - it would not end well. Nokia would
become Microsoft's slave and become instantly unprofitable, lose all its market
and become a tiny bit-player in smartphones, making money only as a box-mover
with perhaps tiny margins some day with low-cost devices. Yeah. Like it is
today. Sony sold 8.8 million smartphones. Nokia sold 6.3 million. Nokia has actually
fallen to 10th biggest smartphone maker, even Lenovo is ahead of it - and Nokia
now is so much in distress, it makes a 49% loss on every smartphone it manages
to push on unsuspecting customers - who then return them at Nokia record levels
and 4 out of 10 buyers rate the Nokia Lumia series as the worst phone possible
(according to independent survey of Lumia buyers by the Yankee Group earlier this
Spring).

Nokia exchanged 29% market share with strongly growing unit sales, revenues and
profits - for 4% market share today with declining unit sales, revenues and
ever increasing losses. The promise of Windows Phone reached its peak market
share of 3% with 4 million unit sales in Q2 but now even that is in decline,
Nokia Lumia sales fell from that peak by a quarter already and now the Nokia
Lumia market share for its Windows Phone based smartphones is.. 2%. This was
achieved by murdering, obliterating, wiping out 27% of Symbian market share by
Elop's 'strategy' and the only little bit of irony left, is that 18 months
after Elop announced Symbian to be uncompetitive and obsolete, Nokia's
smartphones built on Symbian still outsell those built on Windows Phone.

So who cares what this moronic strategy will achieve next year? I am truly
tired of the story. But some Microsoft fan-boys again are promising yet once
again, that 'this time' Microsoft will succeed in winning even though Microsoft
failed with Windows Mobile, and failed with Windows Phone before Nokia joined,
and failed again with Windows Phone 7 and now somehow it 'will be different'
with Windows Phone 8. But yes, Steve Ballmer just told Microsoft shareholders
that this Christmas, Windows Phone 8 is outselling last Christmas Windows Phone
sales by a factor of 4. So how did they do last Christmas? About 1.8 million
total smartphones under Windows Phone. If they now are doing 4 times better,
the sales level would be around 7.2 million units. Before you say any 'oohs and
aahs' - that would mean 3% market share for 'the Third Ecosystem' haha. How good is that? Well, Android is the biggest OS with 71% market share and growing. Apple's iPhone iOS is the second biggest experiencing now the sales hysteria of the new iPhone launches worldwide. In third place is the venerable Blackberry OS and in fourth place is Samsung's bada - which last quarter had a market share of 3% and was growing. If Windows Phone achieves 3% market share, it will move from 6th ecosystem to 5th, passing only one - yes, Nokia's Symbian. Its been years of Windows trying, and thats where they are at? Can't even catch up to bada, Samsung's 'second' OS for the Emerging World markets. See all the Q3 smartphone stats here.

That previous 3% market share peak for Windows Phone was, by the way, what Microsoft managed just briefly in Q2 of this year,
before Ballmer decided to screw Microsoft customers and handset partners, by denying
any migration paths from Windows Phone 7.5 to Windows Phone 8. No software
upgrades allowed, even for 'flagship' smartphones by Nokia like the Lumia 900
that was just released weeks earlier with 'strategic partner' AT&T..

Sure. And Elop the Idiot, is echoing those promises of the
Third Ecosystem, not just welcoming new competitive smartphones by rivals
Samsung and HTC, he even says it would be good if Microsoft itself launched
smartphones under the Microsoft brand, to compete directly against its 'strategic
partner' Nokia. Whose CEO is Elop, exactly? And talking of Microsoft's own
smartphones. We've seen their first PC hardware already, their tablet. And now
rumors come from usually very reliable Digitimes of Taiwan, that Foxconn will
start to manufacture Microsoft branded smartphones. How would they know?
Because Foxconn is based out of Taiwan.

WHY WINDOWS PHONE 8 WILL FAIL

So. Windows Mobile had a peak market share of 12% once, before the iPhone came
along. Windows Phone 7 had a peak of 2% market share before Nokia joined and
was so poorly received by the market, that by the time Nokia's Lumia series
launched, Windows Phone and Windows Mobile combined - were down to 1% market
share. Nokia 'rescued' that only by sacrificing its own market share of 29%
trading that for a 2% gain on Windows Phone and leaving Nokia Symbian with 2%
left. So Nokia traded 27% o profitable smartphone business on Symbian for 2%
loss-making business on Windows. You call that a 'good bargain'? I don't.

Now its supposed to be 'better' with Windows Phone 8? Why? Windows 8
integration? And where is this different from the Windows 7 integration that
Microsoft promised with Windows Phone 7, or the Office integration Microsoft
promised on Windows Mobile, or indeed - full Office suite integration Microsoft
and Nokia achieved - on Symbian! back when Elop was in charge of the
partnership with Nokia, from Microsoft's side.

If there was some magical integration benefits, we should have seen that, gosh,
back in 2003 I'd say, or in 2004 or 2005 or 2006 or 2007 or 2008 or....

Yeah. Next?

Ah, the promised third ecosystem. Microsoft had 5% market share with Windows
Phone and Windows Mobile two years ago at this time. How did that pan out, with
the best efforts by Microsoft and handsets made by Samsung, LG, SonyEricsson,
Motorola, HTC, Dell, and many many more? A year later that was 1% market share.
That is what Microsoft is capable of. It is expert at destroying market share
in smartphones. Why would Windows Phone 8 be different? I trust patterns.
Microsoft is a market share murdering machine. And where are those partners?
You won't find the Sony or LG or Motorola or Dell brands anymore making Windows
based smartphones - they all do continue in smartphones, making Android based
smartphones.

When Elop announced the Microsoft partnership, he did bring in 29% market share
to play. He achieved at its peak 3% market share for Windows Phone. So he
squandered 9 out of every 10 customers Nokia had patiently built over two
decades, in the costly transition to Windows Phone 7. Now he does not have 29%
to play with. Today Elop limps in with 4% total smartphone market share (Windows,
Symbian and MeeGo, combined) to try to convert to Windows Phone 8. What will
that get you? If the same pattern holds, he will bring 0.4% - yes under one
half of one percent - gain to Microsoft's so-called 'third ecosystem'. This is,
if we assume Elop manages to do 'as well as' he did with Lumia last time.

LEARNING FROM LAST TIME

How was last time? Last time, Elop launched the new Lumia series with 2 new
Lumia smartphones for the Christmas season, starting in November. Like this
year. What did they do? In that first quarter, Nokia sold 600,000 total Lumia
smartphones. The market has grown 42% since then. If everything went 'as well
as' last time, we could expect Nokia to sell about 852,000 smartphones for this
Q4 season (on the new Windows Phone 8, plus some remaining sales on the
obsolete Windows Phone 7 based old Lumia smartphones).

What about the launch countries? Yes, this time we have more
countries where the new Lumia smartphones will be launched. The country spread
is very similar to what it was in Q1 of this year, including the USA. Fine. How
did Nokia do in Q1? Sold 2 million smartphones. Since then the market has grown
by 19%, so by this model, we could expect 2.38 million Lumia sales if Elop
manages as well as last time, but we compare to Q1 of 2012. Except at that time
there was a third smartphone in the mix, so this is unlikely to be a close
match. But if you want to be an optimist, thats your range, somewhere between
850,000 and 2,400,000 new Windows Phone 8 based Lumia smartphones to sell for
the Christmas period this year, under optimal conditions (plus perhaps a
million or 1.5 million of the obsolete older Lumia series).

That is not going to happen. Why?

PRICE

So lets start with price. When Elop launched the Lumia series one year ago, his
price for the Lumia 800 was 420 Euros, and the Lumia 710 was 270 Euros (note,
these prices are unsubsidised prices, ie 'real prices' without contract
subsidies so the real price of an iPhone 5 is about 650 US dollars not 199
dollars you get on a 2 year contract). Their average price was thus 345 Euros
or 450 US Dollars. The world average price of smartphones in 2011 was 307 US Dollars.
The Lumia series was priced on average 46% above the world average smartphone
price.

What did moron Elop do now with his new Lumia relaunch? The
world average smartphone price has fallen 7% to 284 US Dollars. Elop pricing
decision is.. Lumia 920 costing 649 Euros and Lumia 820 costing 499 Euros
giving an average price for the two of 574 Euros or 749 US dollars !!! The
Nokia Lumia series as launched last year was 42% above the average price of
smartphones globally, and achieved 600,000 unit sales. Now Elop bravely pushes
his new Lumias which cost .. 2.6 TIMES
MORE than the average smartphone price! He has raised his prices by 66% from
last year while the world price level fell by 7%. That means he is effectively
73% more costly now.

I wonder if Elop slept through the basics of economics class over at McMaster
University up there in Canada? But the standard economic theory suggests that
if you raise your price, you sell less, and if you want to sell more, you need
to lower your price. Elop is accused by all ratings agencies for collapsing
smartphone sales and market share, which is why Nokia's share price is now
rated as junk by all three ratings agencies. What is his 'remedy' - he jacks up
his prices - by effectively 73% !!!! - and he is 2.6 times more expensive than
the average smartphone sold in the world. And you, the reader, expect Nokia to
'do as well now as it did last time' with Lumia? Think again!

Apple's primary market is the USA where the customers are very affluent and
most smartphones are sold with subsidies. Nokia's main markets are in the
emerging world where most phones are not sold with any subsidies - and where
customers are not affluent. Most Nokia customers appreciate the value, not the
premium price, of Nokia. Nokia's customer base expects a good price/performance
ratio, they cannot afford to pay iPhone-level prices. Now Elop goes 2.6 times
above the average price of smartphones globally? This is never going to be 'as
good as' it was with the first version of Lumia.

EXCLUSIVE CARRIER DEALS

This is perhaps the most absurd decision by any handset maker CEO ever. When no
other smartphone maker ever pursues this strategy in the mass market, and even
those that tried this in launch strategy - like Apple - have immediately
attempted to get away from the strategy as soon as contractually possible. The
handset business is a mass market race. For a major manufacturer, like Nokia,
you want maximum reach, maximum coverage. You do not want exclusive carrier
deals. The carriers may prefer an exclusive deal, but it is never in the
handset makers best interest - if market share is the goal. If market success
is the goal. Nokia is struggling with market share and unit sales collapse.
What you want is to flood the market on as many carriers with as many handset
models as possible - look at Samsung! But no, Elop does the opposite. One year
ago, with the first launch of Lumia, he did have the series broadly available.
Now, he limits the availability with exclusive carrier deals!

Not me. Don't listen to me. Read what all other handset
experts have universally said - that this is a dumb idea. If Apple moved away
from this concept as fast as it could, and Samsung's dramatic growth is proof
of exactly the opposite strategy - widest possible reach - then yes, if Elop
does this with the re-launch of Lumia - it will not sell 'as well as last
time'. No way.

CARRIERS HATE SKYPE

Then there is Skype. Do not come here to argue 'but you can
do Skype on any phone' or 'there are tons of OTT services on other phones like
iMessage, Facetime, Blackberry Messenger and Googletalk' etc. It doesn't matter
what YOU think. The FACT is, that Nokia CEO Stephen Elop told Nokia
shareholders - and I quote - "Indeed,
Microsoft did buy the Skype company as part of the ecosystem that comes with
Windows Phone and Windows. The feedback from operators is they don’t like
Skype, of course." Elop went on to explain why carriers/operators hate
Skype " (because) it could take away from revenues."

It is a fact, beyond any
conceivable argumentation - that operators/carriers hate Skype explicitly, and
hate Windows Phone because of it. This was with Windows Phone 7 which did not
have deep Skype integration and did not reach the full Microsoft Windows
desktop environment. With Windows 8 that is complete. If the carriers hated the
Nokia and Microsoft partnership last year when Skype was only 'coming'. And
that level of carrier support resulted in a peak market share for Windows Phone
of 3%. Now that Windows Phone 8 does have full Skype - and Nokia CEO openly
admits that 'of course' carriers hate Skype - what do you think those carriers
will do with Nokia's Lumia Windows Phone based smartphones? Do you seriously
think Windows Phone 8 will 'do as well as' last time? No way.

RUINED REPUTATION

Then there are those who
really wanted a Windows based smartphone. Who really looked forward to Nokia
hardware excellence married to Microsoft's Windows software. Yes. Such
customers do exist. They were tricked into becoming the guinea pigs who were
fed defective and incomplete bug-filled and poorly designed early Lumia
smartphones. Most will have learned their lesson and will buy an Android or
iPhone next. What good will was there to this partnership was definitely sunk
when Microsoft announced that there will be no migration path from the first
Lumia phones to Windows Phone 8. If you think Nokia's best reputation and what
Microsoft had left last year, was able to achieve what modest 'success' they
did, now it will not be that 'good'. No, this time it will not be 'as good as
last time'. And this is before we consider how poorly the Lumia series and
Windows Phone has met specifically Nokia customer needs - see 101 faults in
Lumia (now with more Lumia: upgraded to 121 faults).

MARKETING OVERKILL

So then Elop promises the biggest marketing launch budget ever. Yeah. When have
we heard that before? Last year, Elop budgeted 3 times more for the original
Lumia launch than Nokia had ever thrown at any phone launch. THREE times more
than what the world's largest handset maker and largest smartphone maker had
ever done, a company that was known for dominating the marketing in its
industry. And that was married with carriers joining in - for example AT&T
did its biggest handset marketing push ever, to launch the Lumia. And add to
that, Microsoft's massive budget, throwing even free Xbox 360 gaming consoles
to buyers of Nokia Lumia handsets. Nokia booked Times Square in New York City
for a massive launch party yet. What did that get you? Nine months later Nokia
hit 3% market share at its peak. Now Elop promises to top that budget? Yeah.
You really think it will matter? No matter how much more lipstick you smear on
the pig - it is still a pig, Stephen Elop. It is still a pig. You best make
back bacon out of it, Canadian-boy, nobody is buying your pig.

CARRIERS WANT A THIRD ECOSYSTEM

What we also hear is from both Elop and from Microsoft, that apparently they
hear from carriers that the carriers/operators want a third ecosystem. They do
not want to remain in a duopoly situation with Android and iOS. Ok. Listen
carefully - what they have NEVER said, is that they want a Microsoft based
third ecosystem. Not one carrier has ever said that. They have yes, said quite
often actually, that they welcome another ecosystem or platform. But nobody
welcomes Microsoft the cruel mistress and psycopath dictator. They want a
partner. Like whom? Well, like Blackberry or bada or Symbian or Meego - all of
these have been mentioned by some carriers/operators by name but never
Microsoft or Windows. And what is their fave choice of third ecosystem today?
Tizen! Yes, Intel's and Samsung's Tizen, what Elop abandoned from MeeGo
partnership and Samsung jumped in to take over. Tizen. First phones launching
in the Spring of 2013. Tizen. Tizen. Tizen. Why Tizen? Because many CARRIERS
are themselves part of the Tizen partnership !!!!!! Like Telefonica

So don't delude yourself.
Carriers do not want to drink the poison that is a partnership with Microsoft.
They have seen how it is certain death.
They do welcome a third ecosystem, and they have already SIGNED UP to
Tizen as the third ecosystem... Don't let the Microsoft reality distortion
field fool you. Carriers fear and hate Microsoft, they do not want Microsoft
anywhere near their strategic plans and platforms.

WIDE PORTFOLIO.. NOT

And then how do we reach
maximum customers, if you want to gain market share and increase sales
globally? You diversify, to meet specific customer needs. Some like the thin
slab iPhon-a-Clone look-alikes. Others don't. There is a big market for
smartphones with real QWERTY keypads from Blackberry clones to the
sliders/folders such as the iconic Nokia Communicator series. Who is
particularly attracted to real physical keyboards? The heavy texting and
messaging users, the youth and young adults, who live on Twitter and Facebook
and use all sorts of free messaging providers. Half of the youth can send
messages blindly, with the phone hidden from view. That is almost impossible to
do with a touch screen phone. Nokia has a strong legacy in QWERTY variants to
its top phones such as the sister phone to the last global bestseller-award
winner Nokia smartphone, the N8, whose QWERTY sister was of course the E7. And
for example the MeeGo phones, the phone that was sold, was the N9 (pure touch
screen) but it has a compelling sister phone with a QWERTY slider, called the
N950, which was produced in small numbers (but Elop didn't release it for being
sold, even though the demand was enormous).

Nokia's legacy, millions of very satisfied customers, have years out and years
in, bought Nokia smartphones that included a full QWERTY keyboard of some kind
or another. Elop admits there have been internal 'debates' about QWERTY
variants, but as there is none on the Lumia series, clearly Elop has overruled
his competent and knowledgable in-house experts - no wonder so many of them
have been leaving the company.

Same story with the camera.
Nokia's own study released this year, revealed that explicitly for Nokia brand
smartphone buyers, this year 2012, the biggest feature their buyers want - is
the camera. No surprise this has always been a Nokia strength, in no small part
due to Nokia's exclusive partnership with camera optics specialists Carl Zeiss.
The top Nokia flagship two years ago had a 12 megapixel camera sensor (it was a
Symbian phone, the N8, a highly praised and award-winning smartphone that in
its first quarter of sales, did 4 million sales worldwide. and note, the
smartphone market has more than doubled since then. So Elop should be, just by
doing 'normal Nokia' - achieve about 8 million sales of Lumia on Windows Phone
8 now, in addition to the modest numbers of the older Lumia sales).

So Nokia has a legacy in this, Nokia customers ASK for the camera. And Elop has
given us now, what 6 separate models of the Lumia series, including three
consecutive Windows Phone based flagships, every 6 months: the Lumia 800, the
Lumia 900 and now the Lumia 920. And so, two years ago the N8 had a 12
megapixel camera (using Symbian). The current top Nokia Symbian smartphone has
a camera with a 41 megapixel sensor. And on Lumia? The flagships have regressed
to 8 megapixels !!! Elop has literally
taken Nokia customers back years - YEARS - on what the Nokia own customer
survey reveals, is the top most feature that Nokia smartphone buyers ask for.

MISMANAGEMENT AND MISTAKES

The old Lumia series was plagued with software bugs and manufacturing errors
(read the 101 problems in Lumia, now upgraded with more Lumia, to 121
problems). Now the newest Lumia series, running Windows Phone 8, is already
reputed in having more software and hardware problems. Nokia is poisoning what
little remains of its loyalty and destroying its brand. This is all 100%
management mistakes and errors. As I keep saying, Elop has created the biggest
market collapse of any market leader, in any industry, of all time. His
performance is the biggest management failure ever seen in global business, and
he is thus the worst CEO ever to take over for any Fortune 500 sized company.
He replaced strongly growing global leadership position - where Nokia towered
over all its rivals more than Toyota or GM or Volkswagen or any other car maker
has ever done, since Ford nearly 100 years ago when it sold the Model T. Elop
took over Nokia when Nokia was twice as big as Apple and four times as big as
Samsung in smartphones, and growing faster than Apple! Nokia's smartphone unit
was not only profitable, its average prices were increasing, and Nokia set a
record for the jump in its profits.

This Elop threw away, and
today only 2 years later, Nokia has one eight the market share, and has fallen
to tenth in the Top 10 biggest smartphones. Apple is four times bigger than
Nokia in smartphones; Samsung is nine times bigger. Nokia's smartphone unit was
plunged instantly into loss-making and its losses keep growing bigger, not
smaller, under Elop's management. As I pointed out, in Q3, Nokia was making a 49%
loss on every smartphone it managed to sell..

SO WHAT CAN WE EXPECT?

Well, it was clear going
from Q2 to Q3, that Nokia's old Symbian (and MeeGo) sales are now in terminal
decline. There are no more new smartphones released on those platforms. If the
sales decline was huge in the last quarter, with no new phones for Christmas
and the newest Symbian phone being nine months old, the carnage continues.
Symbian (and MeeGo) smartphone sales will definitely decine for Q4

I should point out, that the
global smartphone growth average from Q3 to Q4 for Christmas sales, averaged on
the past 3 years, is 28% Quarter-on-Quarter, which suggests Q4 smartphone sales
roughly in the 210-215 million unit level for this Christmas season. Nokia's
own average sales has suffered because of Elop's mismanagement, but even so,
over the past 3 years, the average Nokia smartphone sales grew from Q3 to Q4
was 18%. If Elop simply hired a monkey to replace him, and that monkey did
nothing more to damage Nokia. If Nokia was only doing what is normal, it would
now grow smartphone sales from 6.3 milion to 7.4 million smartphones in Q4.
That is the MINIMUM that Elop should be doing, what with the fantastic launch
of the long-awaited Windows Phone 8 and all the MIcrosoft support and
established carrier relations for Windows Phone and the Lumia brand presence
globally, etc. How much Nokia smartphone sales will lag 7.4 million this
quarter, is a sign of how utterly hopeless Elop is as a professional manager
and executive for Nokia.

There will be legacy Lumia sales, on the old Windows Phone 7.5 operating
system, the familiar four Lumia handsets that saw quite catastrophic sales
collapse from Q2 to Q3. That collapse of course continues but there will be
some sales of old Lumia.

The only hot new Nokia smartphones this Christmas are the new Lumia devices
running Windows Phone 8. Lumia 920 and Lumia 820, on what few carriers they are
offered, at what prices and with what limited availability.

I have modelled a few scenarios. I have assumed Nokia can repeat last year's
sales of the original Lumia series (adjusted for market growth from 2011 to
2012). I have taken another assumption, what if the sales this Christmas are
more like Q1 of 2011, for Lumia, as there are more countries covered now. Then
I have assumed the migration level from existing Nokia smartphone customers to
replace their phones (Symbian to Lumia). And I have taken the 'top down'
approach, looking at Ballmer's bold claims and giving Nokia the best benefit of
the doubt. I get this kind of scale:

Nokia Q4 smartphone sales are likely in the range of 4.8 million to 6.8 million
this quarter, Q4 Christmas quarter of 2012. That would be roughly 31% of
Symbian/MeeGo sales, 25% of old Lumia sales, and the remainder, 44% of new
Lumia WP 8 sales. Nokia's total smartphone market share is headed to something
around 3% now, and the Lumia series, Windows Phone based Nokia smartphones
would have around 2% market share.

If you think this is
'success' going from 29% market share, dominating over Apple and Samsung,
GROWING sales, growing unit sales MORE THAN APPLE, and making huge Nokia-record
profits; to abandoning that strategy, and shifting to Windows where you now
have 2% market share, are making massive losses, and your 'partner' is already
planning to make smartphones in competition against you. I think you and I have
a different definition of success.

PS
Nokia Board - fire Elop NOW !!! Fire the Microsoft Muppet Now! He is utterly
incompetent to run Nokia and every day he is in charge, he damages Nokia more,
and is scaring away what remains of competent staff, who fear every day that he
makes more moronic decisions.

And two short plugs - if you are interested in the facts, numbers, market shares, global and regional splits of the handset market, including smartphones, dumbphones, their operating systems etc, please take a look at the TomiAhonen Phone Book 2012 with all data current to the end of 2012.

And if you want to see what the near future of mobile industry looks like, from the expert who has in this mobile industry been the most accurate forecaster in the past 12 years (but past performance is no guarantee of future accuracy haha) including BY FAR the most accurate forecaster for Nokia, its smartphones and Microsoft Windows Phone - you might like the TomiAhonen Mobile Forecast 2012-2015.

October 09, 2012

The most dynamic big industry on the planet. The most relevant technology to all digital migration today. The future of the PC says the biggest PC maker Hewlett-Pacard, the future of the internet says the biggest internet company Google, the future of home electronics says the biggest home electronics company Sony, the future of social networking says the biggest social networking company Facebook, the future of gaming says the biggest gaming company EA, the future of money says Visa, the future of TV says the BBC, the furure of music says Warner Music, the future of newsmedia says the Associated Press, the future of .. well, just about anything digital. That is mobile - a Trillion-dollar industry, driven by its consumer-facing gadget, the 250 Billion dollar mobile phone handset business, epitomized by the likes of the iPhone 5 and the Samsung Galaxy S3.

Yet little is known of this huge industry, apart from the quarterly sales numbers. There are six times more mobile users than Facebook. Six times more people use mobile phones than have a car. But we know far more about Facebook and about our cars, than we know about the phones in use. Five times more mobile phone telephone numbers in use than fxed landline phone numbers globally. Four times more mobile users than the total number of personal computers of any kind, desktops, laptops, netbooks and tablets all added together! Three times more mobile phone accounts than total television sets on the planet. Three times more mobile users than internet users (and the internet user number include mobile users). Twice as many people use mobile phones than use a toothbrush on the planet. Mobile phones have 1.5 times more users than FM Radios on the planet. People are replacing their wristwatches with mobile phones, mobile phones are used by hundreds of millions of illiterate people so more people have use of mobile than have use for pen and paper. That is a massive industry indeed.

Yet what do we know about it, except the news coverage, that Apple won some lawsuit against Samsung. Did that stop Samsung selling its Galaxy S3 or the Galaxy Note? No, Samsung keeps selling more smartphones than Apple does. We see from some quarterly smartphone stats that Nokia's Lumia series is failing, and maybe the article mentions that Windows Phone has so far only has captured 3% of the smartphone market after being 24 months on the market and nine months of hectic Nokia, Microsoft, AT&T and related marketing extravaganza. Yes, so Nokia Lumia is failing, did you know Nokia's Symbian smartphones still outsell all Windows Phone smartphones by all manufacturers? Yes its true. And that by global reach, the 'obsolete' Symbian reaches the pockets of 132 million people worldwide while the new wonderful Windows Phone doesn't reach 30 million today. And yes, you read that right - Symbian has a far wider reach by active users than say, Blackberry. That is the kind of information you may want to know, but is horribly hard to find.

If you are involved in the mobile industry or are interested in it, you will want to know what kind of camera resolutions are in use worldwide, how many of the phones in use are cameraphones, and how many of them have a camera with the resulution of 5 megapixels or more. You will want to know how many phones have a QWERTY style input to do messaging efficiently or how many have a touch-screen input, etc. How many mobile phones are 3G enabled, or have WiFi or do Bluetooth or NFC or GPS, or have a memory card slot. That kind of information is almost impossible to find anywhere, unless you buy one of those industry reports costing thousands.

What of the regional differences. Clearly the iPhone sells well in the USA and Europe, but when you go to India or Africa, you won't find iPhones. What is the regional success of given phone brands, smartphones, and their operating systems. What is the migration rate of the phone base in Latin America from basic phones to smartphones; what is the migration rate of phone technology from 2G to 3G in Africa; what is the connectivity capacity of CDMA vs GSM in Eastern Europe, how many Asians are connecting to the new Chinese TD-SCDMA 3G standard, etc. And what are the prices? What are average prices of smartphones in the Middle East or of dumbphones in the North America? What is the price pyramid of handsets, of those smartphones sold, how many are in the price range of an iPhone for example. These are all issues that may be of big relevance to you, yet they are mostly not covered anywhere.

Now we have one source! All these and more, in the brand new edition of the TomiAhonen Phone Book 2012, all data updated and current to the end of the year 2012. How many mobile subscribers have multiple phones, how many phones are smartphones, how many phones have an HTML browser or can do Java. What are the regional reaches of the various smartphone platforms etc etc etc. All the data in one place, in one document, 172 pages, over 100 tables and charts, and best of all - its all formated for the small screen ! Yes, the TomiAhonen Phone Book 2012 is formated for the small screens of smartphones. In a pdf file format, you can read it on any smartphone, keep all the mobile industry data handy in your pocket, available at any time.

Many of the major data sets are broken down by the 8 regions I also use in the TomiAhonen Almanac and the TomiAhonen Mobile Forecast - so 4 affluent parts of the world: North America, Western Europe, Eastern Europe and Advanced Asia-Pacific Region; and 4 Emerging World parts of the world: Africa, Latin America, Middle East and Asia Developing. The Phone Book 2012 even has a big data table in the back covering the 60 biggest countries by handset sales - thats nearly every relevant country you can imagine - and shows their mobile subscriber counts, their handset annual sales, ther average sales prices, their bestselling dumbphone brand and bestselling smartphone brand per country, etc. An invaluable resource, just that one table alone. Here is the table of contents for the Phone Book:

TomiAhonen Phone Book 2012Table of Contents and number of charts/tables per chapter

The TomiAhonen Phone Book 2012 has just been released. It only costs 9.99 Euros, you can buy it only from one place, my website, at this link: TomiAhonen Phone Book 2012. I will shortly add the full updated table of contents (it still shows the previous version from 2010), so you can see more detail. But yes, if you were hungry for data about the handset industry, this is your best value resource, get yours today! TomiAhonen Phone Book 2012

October 02, 2012

Kantar Worldpanel surveys new smartphone sales in many countries, and releases their data on selected countries and at irregular intervals. It is always insightful to dig through their numbers when we get some. And they have just released their September numbers for a series of countries.

Please note, this blog entry has been revised and corrected, the EU5 numbers for Windows sales according to Kantar did not decline 28% as I first reported, they rather increased by 8% in the EU5 region (they did fall in the other parts). This was my mistake in taking the wrong number from my table. The math error was luckily caught by a person 'chainsmoker' in the comments. I have corrected and updated the table with the correct numbers and adjusted the totals and the commentary accordingly. The other numbers are as originally reported as before, where Windows sales did decline in USA and Australia, and by population-weighted average, Windows sales also did fall globally; and there was no error in the Symbian sales, those declined in in all regions, EU5, USA and Australia. I apologize for the mistake in the early version of this story. The numbers below have been corrected.

This time Kantar includes the EU5 (Germany, France, UK, Italy and Spain the biggest 5 EU nations by population, GDP and smartphone sales) plus the USA, Australia, Brazil and Mexico. They give for comparison also the September numbers also for 2011, but that is not really the numbers we want to compare to. Because we know how Nokia Lumia and Symbian did in Q2, we really want to compare Kantar numbers to the end of Q2. September is the last month of Q3, so we want the last month of Q2, June, which is also when Microsoft Osborned the Nokia Lumia series, crashing their sales. For that, we do have numbers from a previous Kantar release, for the EU5 and USA and Australia, for June 2012. I'd have loved to also have Brazil and Mexico for that period, but alas.. (Thanks for correction, CN)

However, as Europe forms nearly half of Nokia's total smartphone sales, and over half of Lumia sales in Q2, as per my analysis of the Nokia Q2 results; and the USA is the big target market explicitly for the Lumia series with AT&T and its biggest new phone launch ever with Nokia Lumia 900, and we now have Microsoft who Osborned the whole 4-handset Lumia line from Q3, lets see if that Osborning suggests Nokia sales have suffered at all. What does Kantar tell us about current sales in Europe, the US and Australia, compared to 3 months ago?

Today, from September 2012 sales, compared to June 2012 sales measured by Kantar, total Windows (in June Kantar still separated Windows Mobile and Windows Phone, now it counts both as one) sales for the two of the EU5 - Germany and Italy, plus USA and Australia have fallen, while sales for Windows smartphones in UK, France and Italy have risen. Meanwhile Symbian smartphones have fallen in all 7 countries. It gives us the following data:

Source: TomiAhonen Consulting Analysis October 2, 2012 on Kantar Worldpanel data from June and September 2012This data and these tables may be freely shared

Note, these are all countries of the industrialized world and half of the smartphone market is now in Asia which is not measured in the above, so these are not necessarily the full picture of how bad it is for Nokia. China is the second biggest smartphone market and could well bring some good news for Nokia, but not in the area of Lumia obivously as only the smallest of the Chinese operators/carriers is even selling the Lumia, among the other Nokia smartphones it sells.

What do these numbers tell us? In Q2 Nokia sold 10.2 million smartphones. 4.0 million were on Windows Phone, the Lumia series and the remainder were mostly Symbian with some MeeGo sales still lingering. If we take the weighted average of the 7 countries, USA, UK, Germany, France, Italy, Spain and Australia - with a combined population of about 680 million, and which count for 49% of all Nokia smartphone sales, and 73% of all Lumia sales in Q2, we can get a reasonable early warning estimate of what Nokia smartphone sales look like now, in Q3 of 2012.

If that ratio holds true for all of Nokia Lumia sales, as we saw in those 7 countries, then for Q3, Nokia Lumia sales will fall from 4.0 million to 3.7 million units.

If that ratio holds true for the rest of Nokia sales ie mostly Symbian, then Nokia other smartphone sales would fall from 6.2 million to 3.6 million units in Q3.

The total Nokia smartphone sales in units would fall from 10.2 million to 7.3 million units (falling 29% in one quarter) and Nokia's global market share would fall from 6.7% in Q2 to 4.3% in Q3. Note that exactly one year ago, at Q3 of 2011, Nokia's global smartphone market share was 14% and two years ago, when Elop took charge of Nokia as CEO, before his idiotic Elop Effect, Nokia's global smartphone market share was.. 33%. Nokia would have destroyed nearly 9 out of every 10 loyal customer relationships it had, in a period of 24 months, by far the most comprehensive market destruction by any market leader in such a short time, of any industry, ever.

Lets see what else Kantar numbers foretell. If Lumia still accounts for about 87% of all Windows Phone smartphones sold globally as they did in Q2 - and there is little to lead us to believe any other handset makers have suddenly released obsolete Windows Phone 7.5 handsets that would have become big hits - so if we say these 3.7 million Lumia sales are 87% of all Windows Phone sales in Q3, then Microsoft can celebrate its total sales in Q3 projecting from these Kantar sales numbers, as a whopping.. 4.3 million smartphones in total. That is .. a 2.6% market share for Microsoft, congratulations 'Third Ecosystem' for once again falling behind Android, iOS, Blackberry and even bada... Small solace, however, that it would look like Windows would finally pass Symbian in globakl market share. Not exactly 'Third Ecosystem' arguably.. Fifth? Microsoft's market share would have peaked at 3% in Q2 and would now again be falling. Yes, they do hope and wish and pray, that Windows Phone 8 can somehow be the magical unicorn that can save Microsoft in mobile. Six years ago Microsoft was the second biggest OS in smartphones and had 12% global market share. Three years ago they were the 4th biggest OS and held 9% market share. Two years ago, Microsoft had fallen to 5th place with 5% and a year ago, when they started their hype about 'the Third Ecosystem' (haha) they had fallen to sixth with 3%. Today, if these Kantar numbers hold, Microsoft in Q3 is down to 2.6%. How's that Third Ecosystem looking now to all you smart folks in Redmond?

Nokia's Symbian? Again if these Kantar numbers hold for the rest of the world, and remember, for Symbain its less accurate than Lumia, because Kantar's country profiles cover only half of Symbian sales while they covered 3/4 of Lumia sales, but yes, if the numbers hold, then Symbian would end with about 3.6 million total unit sales globally and about a 2.1% market share, tumbling down to sixth place, even behind Windows for the first time ever. Symbian held 15% this time last year, and 38% when Elop took over 2 years ago when Nokia still had many strong Symbian partners making handsets on that OS platform. Again, the pattern - he actively destroyed yes, 9 out of 10 loyal customers that Nokia had painstakenly built over decades. He wiped them out, starting with the Elop Effect, in only two years. No company that led its industry, has ever, under the worst outside influences, natural disasters, manufacturing errors or management blunders, been able to demolish 9 out of 10 loyal customers they have had, in any industry, in such a short period of time of only 2 years. This has never happened. Elop is by far the most inept, incompetent management fool to ever take over as CEO of any company in any industry, ever. He has to be fired immediately!

But yeah. What can we expect from the smartphone unit in Q3? We've heard that Lumia series has seen major price cuts across the board. We can also expect with such catastrophic Symbian sales fall, that Symbian prices have fallen too. I am projecting an ASP (Average Sales Price) for the smartphone unit at around 134 Euros (down from 151 Euros in Q2) and total smartphone division revenues of 978 million Euros (down 37% from the 1.5 Billion Euros in Q2). The smartphone unit will report a Nokia-record loss and the whole handset unit continues to report an operating loss as does the whole Nokia Corporation, obviously.

As the world migration from dumbphones to smartphones continues, and will be about 38%, Nokia continues to regress and while before Elop took over, Nokia consistently led the industry, with its smartphone migration rate AHEAD of the industry, Elop has steered Nokia away from its future and today, in Q3 we can expect that Nokia's smartphone migration rate - its future in fact - is down to 9%. Shame!

Thats what the Kantar numbers suggest for us. I would suggest getting some tissues to wipe out the tears, when Nokia reports its Q3 results, and if you were somehow invested in Nokia's smartphone strategy with Stephen Elop's mad Microsoft strategy and Windows Phone and Lumia, may I recommend a good bottle of Finnish vodka perhaps to drown out the misery. I can recommend a good Finlandia vodka if you are prone to the traditional, or if you are more adventurous, perhaps the 'Black vodka' 'Salmiakki Kossu' licorice flavored black Koskenkorva vodka.. That should help you forget the misery for at least one night..

For the rest of the industry, plenty of good news coming from companies big and small from Apple and Samsung, to Lenovo and ZTE, to even newborn Finnish smartphone maker start-up Jolla soon to announce their first MeeGo smartphone, and even Hewlett-Packard is talking about re-entering the smartphone wars. Its a good time in smartphones - if you're not Nokia or Microsoft.

And those who still think they believe - please wake up! Look at Lumia 920 and 820. No meaningful carrier deals, ridiculous pricing, they have far LESS availability, countries and carriers than Lumia 800 and 720 (cheaper phones too) had last year. Yes, Nokia has higher prices, and less carriers and less countries now for these two new Lumia smartphones, than at this time last year for the first two new Lumia smartphones. Why would LESS carriers, in LESS countries with HIGHER prices result in better market success for Nokia? Now after its brand has been severely smeared by a botched year of marketing blunders with the Lumia brand and destroyed Symbian and MeeGo brands? Why would it be 'better' now when EVERY major element for Nokia is worse now, than a year ago?

Don't delude yourself! Don't think Windows Phone 8 can somehow magically transform reality and turn this turd into gold. It won't. Windows Phone is an utterly dead end for Nokia, getting ever less carrier support and ever worse sales for Nokia. It won't get better with Windows Phone 8, it will get worse in 2013. Trust me, I was the most accurate forecaster for Nokia troubles in 2011 nd 2012, I know what I am saying, its not the handsets (which are not competitive) nor the operating system (which still is not up to par) nor the PC ecosystem 'synergy' on the desktop (which Nokia had with Symbian and full Windows integration years ago on the E-Series) nor the number of apps in the Windows Phone 8 stable (far far below what rivals have). No. Its what Elop has been complaining bitterly about every quarter since his Elop Effect - its the carrier relations. Just like we have again this story today at Tech Thoughts.

Nokia's carrier relations were poisoned by Stephen Elop the CEO and they have only gotten worse, not better. Nokia cannot recover with this guy in charge. No pretty Lumiaphone can ever save that. Its what Elop himself says, he says his phones are fine, its the nasty carriers who won't sell his phones. It what ratings agencies Moody's and S&P and Fitch have said, time and again, when they have downgraded Nokia now to junk level. Its not the handsets, stupid, in mobile it is, has always been, and always will be - the carrier relationships. I told you so on this blog in 2007 about Apple, in 2008 about Motorola, in 2009 about Microsoft (Kin), in 2010 about Microsoft (Windows) and Palm, in 2011 about Nokia - and Samsung - and now again in 2012 about Windows Phone and Nokia. And yes, its going to be carrier relations also in 2013 with Nokia. Its always about the carrier relationships!

And am I really that nuts? Or are you also noticing what is slowly building as increasing agreement that the 'Third Ecosystem' fairy tale is accepted as mythology and reality is setting in? Its not me anymore and some other enlightened mobile specialists like Horace Dediu ie Asymco who saw throught the Elop fantasies immediately. Now look what Canaccord Genuity says now it expects Lumia sales to be - in Q4 when the new Lumia 920 and 820 are selling on Windows Phone 8. Do they expect Nokia to achieve new Lumia sales records in Q4? No! Not even matching the 4 million unit sales Lumia did last quarter. They expect total Lumia sales to be 3.8 million smartphones only for the big Christmas Quarter. That would be about 1.6% market share for the Nokia Lumia unit at the end of this year. Not my words, this is one tech analyst. Nokia's Lumia market share at its best peak, this Q2 was nearly 3%. That is what misery looks like. And they are not alone.

There is now Credit Suisse, one of the biggest financial houses has downgraded their Nokia views to this level. They now say for 2013 they expect Nokia total smartphone market share - not just Lumia, all Nokia smartphones combined - to be 2% for the year! That, my dear readers, is very far from the promised 'Third Ecosystem' by which Nokia and Microsoft were supposed to have well in excess of 20% market share in this beautiful partnership. Now Microsoft is creating its own tablets, rumors are flying about Microsoft's own smartphones, and Microsoft openly celebrates HTC's new Windows Phone smartphones ahead of those from 'strategic partner' Nokia. Stephen Elop sounds almost like he's crying when he tries to reassure in interviews that all is ok with Microsoft. And you know what? Credit Suisse now is openly talking about Nokia being broken up and/or sold, mentioning potential buyers of Nokia or its parts as - Apple, Ericsson and Huawei among others. Wait? Who told you this same story a few months ago? Is it that I am crazy, or is it perhaps, that Nokia truly has been colossally mismanaged by CEO Stephen Elop and the company is now headed to be wrecked to pieces. Credit Suisse says they explicitly do not believe the current Nokia program in the handset business to be able to return Nokia to profits (wait - I said that!). Incidentially, Credit Suisse of course lowers their target for Nokia share prices too..

You may not like the way I write about Nokia or Elop. You may not want to believe the Microsoft strategy is fundamentally flawed and doomed. But please look at least at these other experts and accept it is a dire possibility. I am no longer the only one saying Nokia's 2013 market share in smartphones will be in the tiny single digits and Nokia won't be able to return to profits with that business. This company is a dead man walking - and that is all thanks the the most incompetent CEO of all time - when Elop took over the smartphone unit grew unit sales, grew revenues, set a Nokia-record for increases in profits, was highly profitable; and Nokia's market position was bigger than its two nearest rivals - combined! Nokia was witnessing solid share price growth since Elop too over - up 11% in the first 5 months (wouldn't you love to have that now?) and each of the three ratings agencies rated Nokia one notch below perfect - this after a difficult summer emerging from the global Great Recession that plunged most of Nokia's rivals into loss-making. Nokia's smartphone unit generated 40% of Nokia's total profits and let me repeat - Nokia was growing smartphone sales (and revenues, and average sales prices and profits). What moron takes a company that is twice as big as Apple in smartphones, the business Apple decided to stake its whole future on - that during 2010 grew more smartphone sales than Apple's iPhone - and dismantles that market-dominating juggernaut? Who abandons an overpowering - and growing - lead over Apple?

That all was voluntarily destroyed by Elop with his mad Microsoftian Misadventure. This is a delusional madman in charge and the first step for Nokia's future is to fire the idiot in charge. If you don't want to take my projections or numbers in this blog now, please consider those increasingly coming from the other analyst houses who also now talk about 2% or worse for Nokia smartphones - Palm died when it fell below 2%. This is the certain road to ruin! If you don't like my numbers in this blog, then at least be honest, lets see late October when Nokia Q3 results are released. If Nokia reports increasing smartphone sales, Lumia sales growing and a profitable smartphone unit - I will gladly celebrate Elop as a management genius. But you know that won't happen. There is no AT&T miracle or China surprise. Santa Claus is not visiting us. We know Nokia is reporting again worse numbers than we've seen before. We can see the writing on the wall... Its time to make that call, its time to end it all: its time for Elop to fall.

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Tomi Ahonen is a bestselling author whose twelve books on mobile have already been referenced in over 100 books by his peers. Rated the most influential expert in mobile by Forbes in December 2011, Tomi speaks regularly at conferences doing about 20 public speakerships annually. With over 250 public speaking engagements, Tomi been seen by a cumulative audience of over 100,000 people on all six inhabited continents. The former Nokia executive has run a consulting practise on digital convergence, interactive media, engagement marketing, high tech and next generation mobile. Tomi is currently based out of Helsinki but supports Fortune 500 sized companies across the globe. His reference client list includes Axiata, Bank of America, BBC, BNP Paribas, China Mobile, Emap, Ericsson, Google, Hewlett-Packard, HSBC, IBM, Intel, LG, MTS, Nokia, NTT DoCoMo, Ogilvy, Orange, RIM, Sanomamedia, Telenor, TeliaSonera, Three, Tigo, Vodafone, etc. To see his full bio and his books, visit www.tomiahonen.com Tomi Ahonen lectures at Oxford University's short courses on next generation mobile and digital convergence. Follow him on Twitter as @tomiahonen. Tomi also has a Facebook and Linked In page under his own name. He is available for consulting, speaking engagements and as expert witness, please write to tomi (at) tomiahonen (dot) com

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